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Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. ( 1 ) The firm has
Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. The firm has issued bonds with a current price of $ per bond and a yield to maturity of The company's tax rate is The firm has issued million shares of common stock, and the current price per share is $ The stock is expected to pay a dividend of $ per share starting at the next year, and the dividend will be growing at each year.
a Please calculate the value of the firm's debt from the bond and the value of the firm's equity from the stock points
b If you use the Discounted Cash Flow DCF model to estimate the cost of equity, what is the cost of equity? points If the floatation cost of issuing the equity is what is the cost of equity after floatation extra credit points
c What is the firm's weighted average cost of capital WACC points, show all your work to get full credit
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