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Cost of EquityCurrent EPS 7.42Old EPS 3.95CAGR 13.44% Growth 13.44%
Dividend payout ratio 60%DPS 4.45 D1 4.45
Expected Dividend 5.05
Ke = D1/P0 + gKe = 5.05/30 + 13.44%Ke = 16.83% + 13.44%Ke = 30.27% Ke = 30.27%
WACC Estimation
Debt 30,000,000 5.20%Common equity 30,000,000 12.00%Total capital 60,000,000
12,500,000 Should be financed by common equity
WACC 8.60%
I. rs and the WACC will increase due to the flotation costs of new equity.
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