Question: Hello! Can someone help me with this exercise? Thank you in advance! 3. As Q graduate, you become the new CFO in the family owned

Hello! Can someone help me with this exercise? Thank you in advance!

3. As Q graduate, you become the new CFO in the family owned rm. The company is struggling with liquidity, so you know you will need to use your best skills to get debt rolled over. Your elders (the Board) ask you to calculate the cost of equity with the following information: a. Historically, shareholders have perceived a return of 4% over that of debt holders, to compensate for the added risk. b. Last yea r, the company was granted a loan at a rate of 6%. Shareholder retribution was 10% c. As of today, the bank grants a loan at7% d. Share price is currently 40 and next year's dividend is expected to be 4 per share. e. Expected growth rate is 3% f. Applicable RFR is 2% g. Risk Premium stands at 5% h. Industry average unlevered beta is 1.4 % debt in Capital Structure is 30%

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