Question
In: Finance
Year Dividend 2007 $ 0.02 2008 $ &nbs
| Year | Dividend | ||
| 2007 | $ 0.02 | ||
| 2008 | $ 0.03 | ||
| 2009 | $ 0.04 | ||
| 2010 | $ 0.05 | ||
| 2011 | $ 0.06 | ||
| current stock price | $10.00 | ||
| Number of stock shares | 400,000 | ||
| Debt/Equity ratio | 0.75 | ||
| Interest Paid | 240,000 | ||
| tax rate | 36% | ||
| Part A. Estimate the constant annual compounding growth rate based on the dividends 2007 through 2011. | |||
| Growth rate | |||
| Part B. Use the Gordon dividend model to estimate the cost of equity | |||
| Cost of equity | |||
| B. Calculate the WACC | |||
| Cost of debt | |||
| WACC | |||
Solutions
Expert Solution
THE WAY THE YELLOW CELLS ARE GIVEN , I HAVE ASSUMED THAT
IT IS FULLY EXCEL PRESENTATION. SO I HAVE SOLVED FULLY USING EXCEL.
I HAVE GIVEN CELL REFERENCES AS WELL SO THAT IT IS EASY TO
UNDERSTAND. THANK YOU
jeff jeffy answered 9 months agoRelated Solutions
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