Question
1. Stock in BNM Industries has a beta of 0.60. The market risk premium is 8 percent, and T-bills are currently yielding 3 percent. BNMs
1. Stock in BNM Industries has a beta of 0.60. The market risk premium is 8 percent, and T-bills are currently yielding 3 percent. BNMs most recent dividend was $1.90 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely. If the stock sells for $55 per share, what is your best estimate of BNMs cost of equity?
2. Zuhannon Corporations common stock has a beta of 1.5. If the risk-free rate is 2 percent and the expected return on the market is 12 percent, what is the companys cost of equity capital?
Zuhannon Corporations common stock has a beta of 1.5. If the risk-free rate is 2 percent and the expected return on the market is 12 percent, what is the companys cost of equity capital? Zuhannon Corporations common stock has a beta of 1.5. If the risk-free rate is 2 percent and the expected return on the market is 12 percent, what is the companys cost of equity capital?
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