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Exercise 1, 2 & 3 Chapter 29
1/ What is the cost of equity of a company whose shares are trading at 30.2 and which pays a
dividend of 5 over five years and 6 after five years?
2/ What is the cost of debt for a company whose debt at 11% has a nominal value of 1000, is
trading at 1037.9 and has a life of five years (redemption at maturity)?
3/ Use the answers to questions 1 and 2 and calculate the cost of capital of this company. The
company has issued 1000 shares, the corporate tax rate is 34%.

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Subject: Business, Finance

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