Question
No one has answered this completely. If you could please help me with the step-by-step calculations in how to figure this out. 1. What is
No one has answered this completely. If you could please help me with the step-by-step calculations in how to figure this out.
1. What is the cost of equity of a company whose shares are trading 30.2 and which pays a dividend of 5 over five years and 6 after five years?
2. What is the cost of debt for a company whose debt at 11% has a nominal value of 1,000, is trading at 1,037.9 and has a life of five years (redemption at maturity)?
3. Use the answers to questions 1 and 2 and calculate the cost of capital of this company. The company has issued 1,000 shares, the corporate tax rate is 34%.
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