Question
2a. The 10-year US Treasury bond has a yield-to-maturity of 3.5%. Your financial advisor suggests the current market risk premium is 5.5%. If your companys
2a. The 10-year US Treasury bond has a yield-to-maturity of 3.5%. Your financial advisor suggests the current market risk premium is 5.5%. If your companys beta is 1.25, what should be the cost of common stock?
2b. Your businesss dividend last year, D0, was $1.28. The business is expecting a growth rate in earnings and dividends of 6.5% in the future, i.e., g = 0.065. What is the current price of the common stock today (P0)?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
