) You are trying to value WOW share today (End of 2021). Assume the current price of the share in the stock market is $39.06. Assume that the total dividend paid by WOW in the 2021 year were paid as a lump sum (at once) today. You also estimate that for the next two years dividends will grow respectively at 5% and 3% per year. After this (starting in time 3) you estimate dividends will grow at a constant rate of 1% forever. Assume that today the Australian 10Y Government bond has a yield of 1.27%, the market risk premium is 4.08% and the beta of WOW is 0.53. Based on this price would you purchase the share? Why or why not?

e) What was the market capitalization of WOW on the 23 September 2021, assuming that the total number of share outstanding is the same as per the end of the 2021FY? (Use the closing price on that day).

f) What type of source (non-current) is WOW primarily using to finance its operations? What are the advantages and disadvantages of this source of financing? (3 marks)

g) Assume that WOW would like to replace its non-current "lease liabilities" (2021) with a new issuing of bonds. Assume that the issue will have a coupon rate of 7% with a 10 year maturity. Assume this are semi-annual coupon bonds and each have a face value of $1,000 and the required rates of return for similar bonds in the market is 4%. What would be the issuing price of these bonds? How many bonds WOW will have to issue in order to replace its non-current "lease liabilities"?

Source 1: Annual Report 2021 https://www.woolworthsgroup.com.au/icms_docs/195984_annual-report-2021.pdf

Source 2: Woolworths Group Limited (WOW.AX) Yahoo Finance https://au.finance.yahoo.com/quote/WOW.AX/