Transcribed Image Text
Sears, Inc. common stock is currently trading on the NYSE ataprice of $30 per share with 24,000,000 shares outstanding.Dividend just paid is$1.50 per share and is forecasted to grow at a constant rate of12% in the future.U.S. 10-year Treasury Notes are currently yielding 2.5% andSear’soutstanding 10-year debt with a face value of $50 million iscurrently trading at96% of face value and pays annual interest of 10%. The expectedrate of returnfor the S&P 500 stock index (a proxy for the market) is 12%.Sear’scorporate tax rate is 34% and its estimated beta coefficient forrisk is 1.5.*****Please show work on EXCEL spreadsheet, please showEXCEL formulas****a) Estimate the cost of common equity capital for Searsusing thedividend growth modelb) Estimate the cost of common equity capital for Searsusing the capitalasset pricing model (CAPM)c) Estimate the weighted average cost of capital (WACC)for Sears*****Please show work on EXCEL spreadsheet, please showEXCEL formulas****