Overview
Checkpoint 2: Capital Weightings o Book AND Market Value Cost of Debt (after tax)
complete in an Excel Workbook document on a basis that an independent reader can easily follow along your work/assumptions/sources and be mindful of desktop publishing (format/fonts/etc)
CHECKPOINT #2 5 Dividends (marks: 8) 1) Calculate the cost of equity under the Dividend Growth Model using the 5 year historical data 2) Explain if you believe this information is useful for calculating the cost of equity 3) Document the company’s dividend policy 4) Do you expect this policy to continue in the future? 6 Beta (marks: 8) 1) Calculate the monthly change in the stock’s adjusted closing price using the 5 year historical data 2) Compute the same information for the S&P/TSX Composite Index 3) Calculate the Beta for the company using regression analysis in Excel 4) Compare to 3 analysts’ calculations (or best available information); include screen shots 5) Explain if your Beta is correct 7 CAPM (marks: 8) 1) Select a Beta of your choice; explain why; include screen shots if you do not select Beta from task #6 2) Calculate the cost of equity using the CAPM 3) Retrieve GoC bond data (10 yrs.) from the Bank of Canada; include screen shots 4) Is this the right rate to use? 5) Should you change or revise?