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Using DGM , what is the firms cost of equity? Financial information is provided for the CTTE Company. You are to use this file to

Using DGM, what is the firms cost of equity?
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Financial information is provided for the CTTE Company. You are to use this file to answer the next few questions. Assets Cash Accounts ceivable Inventory Current Assets Net Fixed Assets Total Assets 68,000.00 112,000.00 k62,ooo.oo 242,000.00 192,000.00 434,000.00 Liabilities Accounts Payable Short term Notes Current Liabilities Series A Bonds Payable Series B Bonds P ayable Total Liabilities Capital a nd paid iin Surplus Retained Earnings Total equ ty Total liab lities and equity 50,000.00 60,000.00 110,000.00 80,000.00 40,000.00 230,000.00 80,000.00 124,000.00 204,000.00 434,000.00 There are 10,000 shares of stock outstanding that are selling for I-7S times book value The company paid a dividend of $200 per share last year and divid ends are expe cted to grow at 4% per bear. The current risk free rate of return is 3% and the Market Risk Premium is 7% and the firms beta is 1.05 Series A Bonds hate 20 years to maturity and pay interest se mi-an nually at a coupon rate of 6%. Series A Bonds are currently selling for $1,150 Pr bonds Series B Bonds have 12 years to maturity and pay interest se mi-an nually at a coupon rate 4% Series B Bonds are currently selling for $950 per bond. The tax rate for the firmis 25%.

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