Using the Yahoo! Finance Web site (https://finance.yahoo.com) get the current price and five-year dividend history for Intel Corporation (Nasdaq:INTC). Use the same procedure as in the Internet Exercise of Chapter 9 to gather this data. In addition, get the beta for INTC from its Summary page on Yahoo! Finance, and the five-year U.S. Treasury yield (ticker: ^FVX). Note that you will need to divide the index value by 100 to get the yield.

a. Calculate the annualized dividend growth rate from the five-year dividend history using the same procedure as in Chapter 9.
b. Using the stock’s current price, dividend, and growth rate, calculate the cost of retained earnings for INTC.

c. Assuming that the average market return over the next five years will be 10%, calculate the cost of retained earnings using the CAPM. Use the actual beta and five-year Treasury yield (risk-free rate) in the model.

d. To get your final estimate of the cost of retained earnings, simply average the results from parts b and c.

Data from Internet Exercises Chapter 9.

Using the Yahoo! Finance Web site (https://finance.yahoo.com) get the current price and five-year dividend history for 3M Company. To gather this data, enter the ticker symbol (MMM) in the search box at the top of the page, and select 3m Company from the list. Record the current price from this page. Now, click on the Historical Data link. To get a table of previous dividends select Dividends Only in the Show list, set the Time Period to five years prior to today’s date, and click the Apply button. Click the Download Data link to download a file with this data. You may have the choice of either saving the file or opening it directly in Excel. It is easier to let it open in Excel. Otherwise, save the .csv (comma separated variables) file, and then open it with Excel. It shouldn’t need any further processing. You now have the dividends in a worksheet.