Epley Industries stock has a beta of 1.15. The company just paid a dividend of $.45, and the dividends are expected to grow at 4 percent. The expected return on the market is 10 percent, and Treasury bills are yielding 4 percent. The most recent stock price for the company is $72. The company has 1.4 million shares outstanding. The firm's debt is publicly traded and was recently quoted at 93 percent of face value. It has a total face value of $5 million, and it is currently priced to yield 11 percent. The marginal tax rate for the company is 35%.

1. Calculate the cost of equity using the DCF method. (10 points)
2. Calculate the cost of equity using the SML method. (10 points)
3. Calculate the WACC of the company. (20 points)

Stock Beta Current Dividend Dividend Growth Rate Market Return Risk-free rate Stock Price Number of Shares Outstanding Bond price (% of par): Face Value of the Debt Yield to Maturity Tax rate: Cost of equity Dividend discount model CAPM Average Cost of Equity Cost of Debt Aftertax cost of debt WACC Average Cost of equity Market value of equity After tax cost of debt Market value of debt Weight of debt Weight of equity WACC Stock Beta Current Dividend Dividend Growth Rate Market Return Risk-free rate Stock Price Number of Shares Outstanding Bond price (% of par): Face Value of the Debt Yield to Maturity Tax rate: Cost of equity Dividend discount model CAPM Average Cost of Equity Cost of Debt Aftertax cost of debt WACC Average Cost of equity Market value of equity After tax cost of debt Market value of debt Weight of debt Weight of equity WACC