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.