Consider the following data concerning Abby Company What is the company cost of equity? Find the...

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Consider the following data concerning Abby Company What is the company cost of equity? Find the company WACC E() Cost of debt, To Corporate tax rate, Te Cov() Debt, D Var(r) Risk-free rate, r Equity, E Section a. Finding the company cost of equity. Equity beta, B Cost of equity, re Section b. Finding the company WACC. V=D+E WACC Abby Company WACC 10% 7% 35% 0.13 Part B: Finding the expected return using the Gordon Model: Consider the following data. Calculate the company cost of equity. What is the P/E ratio? P₁ b 1,750,000 0.11 2% 3,250,000 Finding the expected return using the Gordon model $11.00 Stock price today 40% Dividend payout ratio 6.00% Annual dividend growth rate $0.45 Earnings per share 9 EPS E(r.) P/E ratio Beta CHITANGO MARKET Portfolio weights Formula Dormula Portfolio beta Formula 1.8 0.3 0.7 Dormula 26 Part C: Formula and Dormula are two stocks listed on the Chitango stock market. Their betas are 1.8 and 2.6, respectively. What is the beta of a portfolio invested 20% in Formula and 80 % in Dormula? Consider the following data concerning Abby Company What is the company cost of equity? Find the company WACC E() Cost of debt, To Corporate tax rate, Te Cov() Debt, D Var(r) Risk-free rate, r Equity, E Section a. Finding the company cost of equity. Equity beta, B Cost of equity, re Section b. Finding the company WACC. V=D+E WACC Abby Company WACC 10% 7% 35% 0.13 Part B: Finding the expected return using the Gordon Model: Consider the following data. Calculate the company cost of equity. What is the P/E ratio? P₁ b 1,750,000 0.11 2% 3,250,000 Finding the expected return using the Gordon model $11.00 Stock price today 40% Dividend payout ratio 6.00% Annual dividend growth rate $0.45 Earnings per share 9 EPS E(r.) P/E ratio Beta CHITANGO MARKET Portfolio weights Formula Dormula Portfolio beta Formula 1.8 0.3 0.7 Dormula 26 Part C: Formula and Dormula are two stocks listed on the Chitango stock market. Their betas are 1.8 and 2.6, respectively. What is the beta of a portfolio invested 20% in Formula and 80 % in Dormula?