The management of Snow White Company is considering whether to utilize its accumulated profits to finance a capital investment project. Relevant data gathered are as follows:

a.The company's ordinary shares have current market value of P100/sh. Costs to be incurred related to issuing new shares will be 8%.

b.Dividends paid last year was P10/sh. Both earnings and dividends are expected to grow at constant 6%.

c.The company's beta coefficient is 1.25. The return of a market portfolio is 10% and Treasury bills are paying 8 % interest. Snow White Company's A-rated bonds are yielding 12%.

REQUIRED:

Calculate the cost of retained earnings using the Gordon growth model.

Calculate the cost of equity if the company decides to issue new ordinary shares using the Gordon growth model.

Calculate the cost of retained earnings using the bond plus method.

Calculate the cost of retained earnings using CAPM.