Fina 510 Assi 6

FINA520 6th Assignment Warning: Student must social occasion the Excel function wizard to calcaulate answers Student Name:SAPANPANCHAL INPUTS use IN THE MODEL P0$50.00 Net Ppf$30.00 Dpf$3.30 D0$2.10 g7% B-T rd10% Skyes beta0.83 Market risk premium, MRP6.0% take a chance free rate, rRF6.5% take great building from debt45% Target capital expression from preferred express5% Target capital structure from general monetary fund50% Tax rate35% Flotation appeal for common10% a. visualise the comprise of each capital component, i.e., the after-tax appeal of debt, the hail of preferred pipeline (including flotation costs), the cost of equity (ignoring flotation costs) with the DCF method and the CAPM method. legal injury of debt B-T rd x (1-T) =A-T rd 10%65%6.50% Cost of preferred farm animal (including flotation costs) Dpf / Net Ppf =rpf $3.30$30.0011.00% Cost of common equity, DCF (ignoring flotation costs) D1 / P0 + g =rs $2.25$50.007%11.

49% Cost of common equity, CAPM rs =rRF + b * MRP = 6.5%4.98%=11.4800% IMPORTANT rail line: HERE THE CAPM AND THE DCF METHODS PRODUCE APPROXIMATELY THE resembling COST OF EQUITY. THAT OCCURRED BECAUSE WE apply A BETA IN THE PROBLEM THAT ESTIMATED FORCED THE SAME RESULT. ORDINARILY, THE deuce METHODS WILL PRODUCE SOMEWHAT DIFFERENT RESULTS. b. Calculate the cost of new stoc k using the DCF model. D0 * (1+g! ) / P0*(1-F) + g =re $2.25$45.007%11.99% c. What is the cost of new common stock, based on the CAPM? (Hint: Find the...If you emergency to get a full essay, coif it on our website: OrderCustomPaper.com

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