Summerdahi Resorts common stock is currently trading at $37.15 a share. The stock is expected to pay a dividend of $2.50 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 8.25% a year. What is its cost of common equity?

5. Booher Book Stores has a beta of 1.30. The yield on a 3-month T-bill is 4.5%. The market risk premium is 7.5% and the return on an average stock in the market last year was 12%. What is the estimated cost of common equity using CAPM?

6. Shi Import Exports balance sheet shows $250 million in debt, $50 million in preferred stock, and $300 million in total common equity. Shis tax rate is 23%, rd = 8.5%, rp = 9.87%, and rs = 15.5%. If Shi has a target capital structure of 40% debt, 5% preferred stock and 55% common stock, what it its WACC?

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