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Question 1. You are a financial manager of a firm and are asked to assess the cost of capitall of your firm. Vou know that

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Question 1. You are a financial manager of a firm and are asked to assess the cost of capitall of your firm. Vou know that - Your firm just paid dividend $3 per share - The current stock price is $60 per share - Firm beta is 10% higher than market average - Constant growth rate is 3% - Expected market return is 9% and risk free rate is 2% - There is totally 10 million of outstanding shares of stocks, and for each dollar equity. firm issued $1.5 debt - Cost of borrowing/issuing bond is 5% - Corporate tax rate 30% Dividend $2 here is [D1 or D0]? What is the value of D1 ? What is the value of DO What is the cost of equity (common stock) using dividend growth model ? (keep 4-digit after decimal point, e.g., 0.1234)

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