1. Find a large publicly traded company with market capitalization > $5 billion (USD or CAD). The company can be located anywhere in the world, as long as their reports are available in English. Remember to exchange the amount to Canadian Dollars.

2. Make sure that the company has all the 3 types of sources of capital that we discussed – common stock (obviously, because it is publicly traded), preferred stock and bonds.

3. Make sure that the company has a dividend payment history of at least 8-10 years,

so that you calculate the dividend growth rate with some confidence.

4. Please answer the following questions in your report:

1. Give a brief description of the company and its business and its overall capital structure.
2. Calculate its cost of common stock using both the methods – DGM and SML. Comment on why they are different. They WILL be different. They can be very different and that is okay! Which one would you trust more in your calculation for the WACC and why?
3. Calculate its cost of preferred stock.
4. Calculate its cost of debt.
5. Calculate its Weighted Average Cost of Capital.

5. Show all detailed calculations in the report.

6. Use all data as of the same date: September 30th, 2020.

Your calculations will be incorrect if you use different data from different dates.

7. Make sure that it is a professional report. Attach relevant references and documents.

8. Do not attach large documents like the company’s annual reports.

Simply provide the link of any document and the page number(s) and specify what data have you obtained from there. If it is just a couple of pages of the document, you can attach it and specify what the document is and what data have you used from there. Use all attachments as appendices. Attach a list of appendices before the appendices section.

9. Companies do not issue just one bond, like you see in your problems discussed in the class. They have MANY bonds. You must calculate the cost of debt for all of these as an aggregate.

10. Companies may have more than one series of common stock. Once again keep that in mind when calculating the cost of common stock. The same goes for preferred stocks issued by the company.