1) (3 pts) Company X just paid a dividend of $2.20 per share on its common stock. The company is expected to maintain a constant 4% growth rate in its dividends indefinitely. If the stock sells for $65 a share, what is the company's cost of equity using the dividend growth model? Cost of Equity % 2) (4 pts) Ten years ago Company YY issued a 30-year $1000 face value bond with a 5% coupon that is paid semi-annually. The bond is currently priced at $975. a) What is the pre-tax cost of debt for Company Y? Pre-tax cost of debt = % b) What is the after tax cost of debt for Company Y assuming Company Y has a marginal corporate tax rate of 24% After-tax cost of debt % 3) (6 pts) Given the following information about Company Z, calculate the percentage of assets financed with debt, preferred stock and common stock. Dehr 6,000 Bonds outstanding with a 6% coupon, $1,000 par value, 18 years to maturity, selling for $920; the bonds make semiannual coupon payments. Common stock: 170,000 shares outstanding, selling for 580.5 per share; Preferred stock 30,000 shares of 5.75 percent preferred stock outstanding, currently selling for $94 per share. a) What is the market value of the assets for company Z? Market Value of Assets =$_ b) What percentage of the assets is financed with debt? %Debt c) What percentage of the assets is financed with preferred stock? % Preferred Stock d) What percentage of the assets is financed with Common stock? % Common Stock 4) (7 pts) You are given the following information concerning ABC Corp. The current capital structure of ABC Corp consists of 25% Debt, 5% Preferred Stock and 70% Equity. ABC has a current corporate tax rate of 22% The company has a 6.2 percent coupon bond ($1000 Face Value) with 15 years to maturity is currently selling for $1046. The bonds pay interest semiannually. ABC Corp has perpetual preferred stock that pays a 5.8 percent preferred dividend and currently sells for $80 per share. Company ABC has a Beta of 1.2 and the current risk-free rate is 1.6% and the market risk premium is estimated at 8%. a) What is the before tax cost of debt for the firm ? % b) What is the cost of preferred stock for the firm? % c) What is the cost of equity for the firm using the CAPM? % d) What is the WACC for ABC Corp? WACC = %