Question: A B C D E F G 1 Parvis Inc. wants to calculate its cost of equity. The company paid a dividend of 2 $0.40

A B C D E F G 1 Parvis Inc. wants

A B C D E F G 1 Parvis Inc. wants to calculate its cost of equity. The company paid a dividend of 2 $0.40 this year which is growing at 6% annually. It also has a risk premium rate of 3 7%, WACC = 10%, a terminal FCF growth rate of 8%, and the following expected 4 free cash flows for the next 3 years: 5 2020 50 6 2021 60 2022 75 8 If Parvis' current stock price is $12 and its average cost of debt is 4.5%, find: 9 1) Rs using the bond risk premium model; 10 2) Rs using the discounted dividend model. 11 12 Parvis cost of equity using bond risk premium: 13 14 Parvis cost of equity using discounted dividend: 15 16

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