1. Google is expected to pay dividends of $3 in the next year (2012). What is the cost of equity of Google if its current stock price is $90? Cost of equity: 18.33%
2. As a technology-based firm, Google has a high beta of 1.4. If the risk-free rate of return is 5% and the market risk premium is 3%, calculate the cost of equity of Google using the capital asset pricing model (CAPM)? Cost of equity: 9.20%