The market value of Chipperbys ordinary shares yesterday, immediately after paying a dividend of 40 pence, was

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The market value of Chipperby’s ordinary shares yesterday, immediately after paying a dividend of 40 pence, was £12.

Dividends are expected to grow at the rate of 5 per cent per annum.

a. Calculate the cost of Chipperby’s equity capital using the dividend growth model.

b. The return on ordinary shares in recent years has averaged 11 per cent; the risk-free interest rate at present is 3 per cent; and Chipperby’s beta is 0.75. Calculate the cost of Chipperby’s equity capital using the CAPM.

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Accounting Understanding And Practice

ISBN: 9780077139131

4th Edition

Authors: Robert Perks

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Question Posted: May 22, 2024 02:02 AM

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The market value of Chipperbys ordinary shares yesterday, immediately after paying a dividend of 40 pence, was

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Accounting Understanding And Practice

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