Question No. 01 This is a subjective question, hence you have to write your answer in the Text-Field given below. Question 1 ( Cost of capital] 2. Critically examine dividend growth model and capital asset pricing model of cost of equity. Which of the two models would prefer the most? Give reasons. – b. ABC Inc. finances its operations with 40 percent debt and 60 percent equity. Its net income is $30 million and it has a dividend payout ratio of 30%. Its capital budget is B = $100 million this year. The annual yield on the company’s debt is 7% and the company’s tax rate is T = 30%. The company’s common stock trades at Po = $100 per share, and its current dividend of Do = $4 per share is expected to grow at a constant rate of g = 5% a year. The floatation cost of external equity, if issued, is F = 1.5% of the dollar amount issued. What is the company’s weighted average cost of capital?