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Cost of equity Earnings= $3 Payout ratio=40% D1= 40%*3 = $1.20 Price= $25 Floatation cost= $2.00 Growth = 1.2-0.82 4 x 0.82 =11.59 Do(1+gl +g

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Cost of equity Earnings= $3 Payout ratio=40% D1= 40%*3 = $1.20 Price= $25 Floatation cost= $2.00 Growth = 1.2-0.82 4 x 0.82 =11.59 Do(1+gl +g 1.2 Ke Po-f 25-2 + 11.59 =16.81 WACC = 6.98 6120000 + 8.36 1080000 108000000 18000000 18000000 +16.81 18000000 =12.9608 =12.96

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