Estimating WACC and Expected Growth in Dividends ModelAssume FedEx Corporation (NYSE: FDX) was trading at $107.47 at May 31, 2011. Its dividend per share was $0.36, its market beta was estimated to be 0.7, its average borrowing rate is 9.5%, and its marginal tax rate is 36%. FedEx's market value of equity (market cap) is $32.95 billion and its total market value (enterprise value) is $34.31 billion. Assume a risk-free rate of 5.4% and a market risk premium of 5.8% to answer the following requirements.(a) Estimate FedEx's cost of debt capital, cost of equity capital, and weighted average cost of capital. (Round your answers to one decimal place.)Cost of debt capital = Answer%Cost of equity capital = Answer%Calculate the weighted average cost of capital. (Use rounded answers from above. Do not round until your final answer. Round to one decimal place.)Weighted average cost of capital = Answer%(b) Using the dividend discount model, and assuming a constant perpetuity for dividends, estimate FedEx's intrinsic value per share. (Use the rounded cost of equity capital calculated in (a). Round your answer to two decimal places.)$Answer(c) Using the Gordon growth DDM, and assuming next period's dividends equal $0.36 and grow at a constant rate for each period thereafter, infer the market's expected growth in dividends that are necessary for FedEx's intrinsic value from the model to equal $107.47 per common share. Assume that its cost of equity capital is 9.5%. (Do not round until your final answer. Round to one decimal place.)

Cost of borrowing = 9.5%

Tax rate = 36%

After tax cost of debt = 9.50% × (1 – 36%)

                                  = 6.08%

After tax cost of debt is 6.08%

Risk free rate = 5.40%

Market risk premium = 5.80%

For Stock X

Beta = 0.7

Cost of equity for FedEx is calculated below using CAPM Model:

Cost of equity = Risk free rate + Risk Premium × Beta

                     = 5.40% + 5.80% × 0.7

                       = 5.40% + 4.06%

                       = 9.46%

Cost of equity for FedEx is 9.46%.

Market cap = $32.95 billion

Enterprise value = $34.31 billion

Value of debt = $1.36 billion

Weight of debt in capital structure = 3.96%

Weight of equity in capital structure = 96.04%

Now WACC is calculated below:

WACC = (96,04% × 9.46%) + (3.96% × 6.08%)

            = 9.09% + 0.24%

            = 9.33%

WACC for company is 9.33%.

b.

Current dividend = $0.36

Cost of equity = 9.46%

Assuming a constant perpetuity for dividends, estimate FedEx's intrinsic value per share is calculated below:

Intrinsic value = $0.36 / 9.46%

= $3.81

Assuming a constant perpetuity for dividends, estimate FedEx's intrinsic value per share is $3.81.

c.

[ Find the given attachment for part c]

Note: Value of debt = Total value of firm - Value of equity

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henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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