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Callahan's common stock currently sells for $52 per share. Its last dividend was $3.80 and is expected to grow at a constant rate of 7%.
Callahan's common stock currently sells for $52 per share. Its last dividend was $3.80 and is expected to grow at a constant rate of 7%. If the firm's beta is 1.25, the risk-free rate is 5% and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? What is the firm's cost of common equity using the DCF approach?
15.00% ; 14.82%
15.50%; 14.65%
15.00% ; 14.31%
16.25% ; 14.31%
16.25%; 14.82%
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