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Given the following two companies and the common assumptions below: CaffeinatedNation Current Share Price $ 3 9 . 7 7 2 Analysts collectively think CaffeinatedNation
Given the following two companies and the common assumptions below:
CaffeinatedNation
Current Share Price
$
Analysts collectively think CaffeinatedNation will be able to grow earnings at percent for each of the next five years.
They further expect, after Year CaffeinatedNation will grow earnings for the foreseeable future at per year.
The analysts also calculate CaffeinatedNation's equity beta as
Assume the company has shares issued and outstanding, and
recently paid total dividend $
GlitterSplitter Inc.
Current Share Price $
Analysts reviewed GlitterSplitter's recent financial reports and estimated the following:
Common Assumptions:
Market Risk Premium
Real RiskFree Rate
Each company's Current Share Price is exactly the same as the respective current theoretical price.
Q What is the implied Required Return for GlitterSplitter Inc.? round to the nearest or as decimal
hint: use the CAPM with equity beta
Q What is the implied Required Return for CaffeinatedNation? round to the nearest as decimal
hint: use the CAPM with asset beta
Q What is the Average Implied Inflation Rate? round to the nearest onetenth of a percent or as decimal
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