Estimating WACC and Expected Growth in Dividends Model

billion. Assume a risk$-$free rate of $5\mathrm{.}2\%$ and a market risk premium of $5\mathrm{.}6\%$ to answer the following requirements.

$($a$)$ Estimate FedEx's cost of debt capital, cost of equity capital, and weighted average cost of capital. $($Round your answers to one decimal place.$)$

Cost of debt capital $=$

Cost of equity capital $=$

Calculate the weighted average cost of capital. $($Use your rounded answers from above. Do not round until your final answer. Round to one decimal place.$)$

Weighted average cost of capital $=$

$($b$)$ Using the dividend discount model, and assuming a constant perpetulty for dividends, estimate FedEx's intrinsic value per share. $($Use the rounded cost of equity capital calculated in $($a$).$ Round your answer to two decimal places.$)$

$$ s $$ final answer. Round to one decimal place.$)$

Discuss the reasonableness of this growth factor.

The growth in dividend factor is higher than expected due to the fact DDM places a tremendous amount of weight on the dividends beyond the forecast horizon.

The growth in dividend factor is lower than expected due to the fact DDM places a tiny amount of weight on the dividends beyond the forecast horizon.

The growth in dividend factor is close to what was expected due to the fact DOM places the correct amount of weight on the dividends beyond the forecast horizon.