Question
Cornwell Industries stock has a beta of 1.15. The company just paid a dividend of $.45, and the dividends are expected to grow at
Cornwell Industries stock has a beta of 1.15. The company just paid a dividend of $.45, and the dividends are expected to grow at 4%. The expected return on the market is 11%, and Treasury bills are yielding 3.7%. The most recent stock price for the company is $72. a. Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) Dividend growth model method b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 3 decimal places.) SML method %
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Fundamentals Of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
13th Edition
1265553602, 978-1265553609
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