14. ABC Corp. has a stock price of $50. The firm just paid a dividend of $3...

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14. ABC Corp. has a stock price of $50. The firm just paid a dividend of $3 per share, and shareholders expect this dividend to increase at a rate of 5% per year. Use the Gordon dividend model to calculate ABC's cost of equity.

15. XYZ, Inc., has just paid a dividend of $5 per share. This dividend is expected to increase at a rate of 15% per year. If the cost of equity for XYZ is 25%, what is the market value of a share of the company's stock?

16. Com is a producer of depressing Internet products. The company does not currently pay dividends, but its financial chief says that in three years, it will be able to pay a dividend of $15 per share, and that this dividend will increase by 20% per year. Assuming Com's cost of equity is 35%, value a stock based on discounted dividends.

17. ABC Corp. just paid a dividend of $3 per share. You, an experienced analyst, are convinced that the company's dividend growth rate over the next 10 years will be 15% per year. After 10 years, you expect the company's dividend growth to slow down the industry average, which is about 5% per year. If the cost of equity for ABC is 12%, what is the value of one share of the company today?

18. It is January 1, 2020. Normal America, Inc. (NA), has paid a year-end dividend every year for the past 10 years, as shown in the table below:

Anne	Share price as of December 31.	Dividend of December 15. per share	SP500 performance
2010	33.00
2011	30.69	2.50	4.7%
2012	35.38	2.50	16.2%
2013	42.25	3.00	31.4%
2014	34.38	3.00	-3.3%
2015	36.25	1.60	30.2%
2016	32.25	1.40	7.4%
2017	43.00	0.80	9.9%
2018	42.13	0.80	1.2%
2019	52.88	1.10	37.4%
2020	55.75	1.60	22.9%

has. Calculate the beta of NA relative to SP500.

b. Suppose that the interest rate on Treasury bills is 5.5% and that the expected market return is E ( rm )=13%. If the corporate tax rate is Tc = 3%, calculate NA's cost of equity using the CAPM model.

vs. Let's assume that NA's debt cost is 8%. If the company is financed with one-third equity and two-thirds debt, what is its weighted average cost of capital using the CAPM model?