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Question 18 5 pts The Doug and Bob Corporation is calculating its WACC. Its 1,000,000 bonds have a 7% coupon, paid semi-annua
Question 19 5 pts The Doug and Bob Corporation is calculating its WACC. Its 1,000,000 bonds have a 7% coupon, paid semi-annua
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Answer #1

Q1:

cost of equity (capm) =risk free rate +beta*market risk premium

cost of equity = 5+1.6*7 =16.2%

Q2:

cost of equity = D0*(1+g)/S + g

where g=growth rate ; S=share price ; D0=current dividend

cost of equity= 2*(1+7%)/30 + .07 =14.13%

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