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

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 1 year ago

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Year Dividend 2007 $ 0.02 2008 $ &nbs

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