Question
I am working on Hilton Worldwide Inc's equity capital cost. I attach a sample and what I have. I got my answer, but I don't
I am working on Hilton Worldwide Inc's equity capital cost. I attach a sample and what I have. I got my answer, but I don't know what it means. In other words, how do I type it into a paragraph? Help
Sample: Cost of Equity Capital Re = Rf + [ * (Rm Rf)] Re =1.82% + [0.97 * (10% - 1.82%)] = 11.32%
This number implies that an investor requires an expected return of 11.32 % to invest in Walt Disneys stock. This high expectation might be caused by Disney's 5-year beta of 0.97 which indicates that the company rises and falls in direct relationship to the market movement.
= 0.97 (Yahoo Finance, 2019). Rf (return of the risk-free rate) = 1.82% (Fed 10-year Treasury Bond as of 11/14/19) Rm (market return) = 10 % (SP 500 10-year return yield)
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