Question
Pangbourne Whitchurch is a regulated public utility. Its earnings and dividends have been growing at a rate of 39.5%, and its expected dividend next-year is
Pangbourne Whitchurch is a regulated public utility. Its earnings and dividends have been growing at a rate of 39.5%, and its expected dividend next-year is $3 per share; the stock currently sells for $32. Its beta is 1.19, the market return is 12.50%, and the risk free rate is 2.10%
a)Use the CAPM to estimate the firm's cost of equity. b)Now use the constant growth model to estimate the cost of equity. Which of the two estimates is more reasonable?
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Bond Markets Analysis And Strategies
Authors: Frank J Fabozzi
8th Edition
013274354X, 9780132743549
