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You are a financial manager of a firm and are asked to assess the cost of capital of your firm. You know that Your

You are a financial manager of a firm and are asked to assess the cost of capital of your firm. You know that

You are a financial manager of a firm and are asked to assess the cost of capital of your firm. You know that Your firm just paid dividend $3 per share The current stock price is $60 per share Firm beta is 10% higher than market average Constant growth rate is 3% Expected market return is 9% and risk free rate is 2% There is totally 10 million of outstanding shares of stocks, and for each dollar equity, firm issued $1.5 debt Cost of borrowing/issuing bond is 5% Corporate tax rate 30% Dividend $2 here is What is the value of D1 ? [D1 or D0]? ? What is the value of DO What is the cost of equity (common stock) using dividend growth model ? (keep 4-digit after decimal point, e.g., 0.1234)

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