Please answer these Questions for my Financial Statement Analysis Class

Estimating Components of Both WACC and DDM An analyst estimates the cost of debt capital for Abbott Laboratories is 3% and that its cost of equity capital is 7.85%. Assume that ABT's statutory tax rate is 21%, the risk-free rate is 4.25%, the market risk premium is 5%, the ABT market price is 102.44 per commeon share, and its dividends are $2.04 per common share. a. Compute ABT's average pretax cost of debt and its market beta. Round all calculations to two decimal places Aversge pretas cost of debt 03 Market beta o b. Assume that its dividends continue at the current level in perpetuity. Use the constant perpetuity dividend discount model and the market price to infer the market's expected cost of equity capital. Round percentage to two decimal places. Hint: Use the equation for the dividend discount model with constant perpetuity. Expected cost of equity capital| 0 % c. Compare the inferred cost of equity capital from part b to the 7.85% estimated cost of equity capital from the analyst. The cost of equity capital calculated in partb is # |than the analyst's estimated cost of equity capital. It's also than the risk-free rate. What can we infer about the market's expectations for future dividends? The market expects a # |infuture dividends \fMotes to 3M's 10-K disclose the following information for the current year: Disclosures ($ millions]) Interest expenze, from the income statement 3460 Weighted average discount rate on operating leases | 2.30% Tax rate 2% Fair value of debt (excluding operating leases) $14,442 The following additional information is from Finance.yahoo at the current year-end. Additional information Stock price $119.92 hMarket beta 0.a7 Risk-free rate 4.50% Market risk premium 5.00% a. Compute 3M's market capitalization using data from its financial repart excerpts above. Round to nearest million. b. Compute the book value of 3M's debt including operating leases for both years. Current year $IZ| . Compute the fair value of debt including operating leases for the current year. 10| d. Compare the current year fair value of debt calculated in part to the book value calculated in part b. The fair value of debt is |:| than the book value, consistent with an I:l in the discount rate used to estimate fair value. Which of the following are possible reasons for the difference? Decrease in the risk-free rate Improvement in 3M's profitability Increasze in the risk-fres rate Ak Ak db AR Lender downgrade of 30 creditworthiness e. Compute 3M's cost of debt capital. Round all calculations to two decimal places. 0 ki f. Compute 3M's cost of equity capital. Round all calculations to two decimal places. 0 ki g. Compute 3M's weighted average cost of capital. Round all calculations to two decimal places. ok \f\f