4. Due to COVID-19, Kering Group (with famous brands such as Gucci, and Balenciaga) plans to manufacture face masks and keep the business in the future 5 years. The first-aid product firms have a cost of capital of 8.5%.

The capital information of both firms is shown as follows:

Unit:

Kering		Face mask business
Beta	0.90	Investment on Face mask plant (Mil)	325
Debt Yield	-2.78%	Free cash flow (Mil)	123
Shares outstanding (Mil.)	126.3
Market Capital of Equity (Mil.)	68220000
Debt-to-Asset (Market value)	36%
BTF (1-yr Treasury bill of France)	2%
Paris exchange index (6months)	-1.6%
Corporate tax	28%
Dividend	5
Growth rate of dividend	3%

1. Please make a comparison of Cost of Capital in Kering based on CAPM and continuous dividend growth model.

2. Please estimate whether the Face mask business can bring positive value to Kering group.

3. If you were CFO of Kering in 2013, you plan to acquire a jewellery brand Qeelin and control for the operation of the brand after the acquisition transaction. Please state your estimation plan on choosing the cost of capital for evaluation of the business.