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Example: CAPM vs. CDGM Assume the equity beta of Johnson & Johnson (JNJ) is 0.70. The yield on 10-year Treasuries is 1.6%, and you estimate

Example: CAPM vs. CDGM Assume the equity beta of Johnson & Johnson (JNJ) is 0.70. The yield on 10-year Treasuries is 1.6%, and you estimate the market risk premium to be 5%. JNJ plans to pay an annual dividend of $3.20 per share at the end of the year and has a current stock price of $120. You expected dividends to grow at a constant rate of 3% per year. Estimate JNJs cost of equity in two ways

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