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 $3 here is [D1 or D0]? What is the cost of equity (common stock) using dividend growth model ? (keep 4-digit after decimal point, e.g., 0.1234) What is the cost of equity (common stock) using CAPM model ? (keep 3-digit after decimal point, e.g., 0.123) What is total value of the firm (in unit \$millions) What are weights of equity and debt to compute WACC, respectively? What is the WACC for your firm using cost of equity from CAPM ? (keep 4-digit after decimal point, e.g., 0.1234 ) We know that WACC is the weighted average cost of capital, which indicates the average risk level of a firm. Given the following two statements, which one is correct ?(A,B,C, or D) I. WACC can be used for every project / division within a firm. II. To make a firm being profitable, the firm must earn returns higher than WACC A. Both I and II are true B. Both I and II are false C. I is true and II is false