https://padlet.com/usictech/colmf4wr5e2yxjqj Group 1 - Semester 2 Week 8 Seminar 1 en-us 2023-03-14 13:02:59 UTC 2026-02-05 05:32:09 UTC hello@padlet.com https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516242430 Anqi che, Chhavi Yadav, Shengtao Fang, and Yinjiang Geng.

flotation cost=4%
net proceeds=(1 - 0.04)P = 0.96P
kp = $8.50 / (0.96P)
kp = $8.50 / (0.96 × $97.50) ≈ 0.09081≈9.08%]]> 2023-03-14 14:45:18 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516242430 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516252153 Huasen Cheng, jiuxu chen, haotian chen, haibo feng
DCF：ks = D1 / P0 + g =0.67/27.5+8%=10.4% ]]> 2023-03-14 14:50:43 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516252153 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516258362 Xiaoxuan Bai , Weihao DU , Yuxiang Diao, Boyuan Ding


Risk free return will be yield on bond=8.75%
Risk Premium given=3.85%
But beta of company is not given, and market beta also not given, hence we can not calculate beta.

Cost of Equity will be= 8.75%+3.85%= 12.6%]]> 2023-03-14 14:54:07 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516258362 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516261520 Linqi Guo, Shujun Guo, Yejing Dang

WACC = (0.40 × 7.50%) + (0.15 × 7.50%) + (0.45 × 12.75%)WACC = 3.00% + 1.13% + 5.74%WACC = 9.87%]]> 2023-03-14 14:55:59 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516261520 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262027 Yejing Dang, Linqi Guo, Shujun Guo

Before-tax cost of debt = After-tax cost of debt / (1 - Tax rate)
Before-tax cost of debt = 6.00% / (1 - 0.20)
Before-tax cost of debt = 7.50%

Cost of retained earnings: The cost of retained earnings is given as 12.75%.

Weight of debt = 40%
Weight of preferred stock = 15%
Weight of common equity = 45%

WACC = (0.40 × 7.50%) + (0.15 × 7.50%) + (0.45 × 12.75%)
WACC = 3.00% + 1.13% + 5.74%
WACC = 9.87%]]> 2023-03-14 14:56:17 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262027 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262049 First question - cost of preferred cost = dividend/ (price * (1- flotation cost )
97.50 ( 1- 0.04) = 93.60
8.50/93.60*100 = 9.08%]]> 2023-03-14 14:56:18 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262049 lchen991 https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262675 Leifang CHEN, Yuze HAN, Mingjun DUAN, Xinyu ZHOU


re = 5.00% + (6.00% x 1.05)
re = 11.30%

Therefore, the firm's cost of equity from retained earnings based on the CAPM is 11.30%.

]]> 2023-03-14 14:56:41 UTC https://padlet.com/usictech/colmf4wr5e2yxjqj/wish/2516262675