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QUESTION

Everything is listed below. Please advise if this is insufficient: Medical Associates is a large for-profit group practice.

Please just disregard the attachment. Everything is listed below. Please advise if this is insufficient:Medical Associates is a large for-profit group practice. Its dividends are expected to grow at a constant rate of 7% per year into the foreseeable future. The firm’s last dividend (D0) was $2, and its current stock price is $23. The firm’s beta coefficient is 1.6; the rate of return on 20-year T-bonds currently is 9%; the expected rate of return is 13%. The firm’s target capital structure calls for 50% debt financing, the interest rate required on the business’s new debt is 10%, and its tax rate is 40%.You are to write a 3-6 page report that answers the following:1.Calculate Medical Associates’ cost of equity estimate using the DCF method.2.Calculate the cost of equity estimate using CAPM.3.On the basis of your answers to #1 & #2, what is your final estimate for the firm’s cost of equity?4.Calculate the firm’s estimate for corporate cost of capital.

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