What is the cost of common equity using all three approaches (CAPM, DCF, and

Bond-Yield-Plus-Risk-Premium) for Coleman Technologies? What is the average

cost of equity?

What is the WACC for Coleman Technologies? (Use the average cost of equity

from problem 3)

Coleman Technologies is currently calculating the cost of capital for a major expansion program, We have the following information regarding the program: - The tax rate for the duration of the program is 40% (ie. T=.40 ) - New 15-year coupon bonds will be issued - Similar 15-year, \$1,000 par value, 12\% coupon, semiannual noncallable bonds currently sell for $1,153.72 - New bonds will be privately placed with no flotation cost - New preferred stock will be issued - Similar 10%, \$100 par value, quarterly dividend, perpetual preferred stock currently sells for $111.101 - Common stock sells for $50 (ie. P0=50 ) D0=4.19 and g=.05 =1.2,rf=.07, and MRP=.06 - Bond-Yield Risk Premium =.04 - The target capital structure is 30% debt, 10% preferred, and 60% common equity