Question Discoverit. Company has just paid $1.2 dividend payment and they promise to increase dividend payments by 3%. The current stock price is 518 and has 500.000 outstanding shares. Calculate cost of equity, based on DGM The company has a beta of 0.8 and market fisk premium is 4.5%. Risk free rate is 2% Calculate cost of cauty, based on SML Discoveritt has only one bond outstanding with a maturity period of 15 years. The band makes semiannual coupon payments and the coupon rates ic 11. The selling price of the bond is $1.067 and face is $1,000. The tax rate is 21% and the company has 2,500 bonds outstanding Calculate before and after-tax cost of debt. Calculate WACC using SML approach to calculate Cost of Equity Calculate WACC using Dividend Growth Model approach to calculate Cost of Equity WEIGHTS C COST OF EQUITY 1. Dividend Growth Model (DGM) Approach 00/01 40 236 5: PO Requited Return/Cost of Equite 2. SML Approach Riske free rate Beta -RP Ritock/Cost of Egun 23 0.8 Stoc Price Bond Price 18 Stocktoutstanding 560,000 EQUITY 1067 Bonds outstanding 2.500 DEBT VALUE OF FIRM Weight of quity Weight of Debt COST OF DEBT You can modity calculate ?MT in this column 15 year 115 WACC-Based on SM Approach i 6 for cost of equity) Remember the formula WACCCost of Equity Weight of Equity. Aftentax Couto where you se stock for Cool County 1,057 1.000 Seranto- Con Payment Bond 10 N 11 Coupon Rate 12 Price 15 Pace 1 Rate Period Rate 15 VTN teoretax cost of Debt 10 Tax Rate 17 Ar tax Cost of Debt 1 19 21% WACC. Based on Dividend Growth Model (ie 36 for Cost of Equity Hemember the formula WACC Castor quity Weight of Arts Cont when you fegured Return for Costoru On Your