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Purpose of Assignment Students should understand corporate risk and be able to use the financial models learned in the class to evaluate and calculate a company ' s weighted average cost of capital and use the analysis to make company investment decisions . About Your Signature Assignment This signature assignment is designed to align with specific program student learning outcome ( s ) in your program . Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree . The signature assignments may be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college / school and used for program improvements . Assignment Steps Resources : Tutorial help on Excel ® and Word functions can be found on the Microsoft ® Office website . There are also additional tutorials via the web that offer support for office products . Scenario : Wilson Corporation ( not real ) has a targeted capital structure of 40 % long term debt and 60 % common stock . The debt is yielding 6 % and the corporate tax rate is 35 %. The common stock is trading at $ 50 per share and next year ' s dividend is $ 2.50 per share that is growing by 4 % per year . Prepare a minimum 700-word analysis including the following :
• Calculate the company ' s weighted average cost of capital . Use the dividend discount model . Show calculations in Microsoft ® Word .
• The company ' s CEO has stated if the company increases the amount of long term debt so the capital structure will be 60 % debt and 40 %