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please solve and explain here is a better picture of the question The future earnings, dividends, and common stock price of Callahan Technotogies Inc. are
please solve and explain
here is a better picture of the question
The future earnings, dividends, and common stock price of Callahan Technotogies Inc. are expected to grow 5% per year. Cellahan's common stock curfenty sents rof 528.00 per share; its last dividend was $2.20; and it will pay a $2.31 dividend at the end of the current year. a. Using the DCF epproach, what is its cost of common equity? Do not round intermediete caiculations. Round your answer te two decimal pleces. b. If the firm's beta is 2.0, the risk-free rate is 4%, and the average retum on the market is 14%, what will be the firm's cost of comimon equity using the CAPM approech? Round your answer th two decimal places. c. If the firm's bonds earn a return of 13%, besed on the bond-yield-plus-risk-premium approach, whot will be f,? Use the midpoint of the risk prernium range ditcussed in fiection 10-5 in your calculations. Round your onswer to two decimal piaces. a. If you have equal conhdence in the inputs used for the three approsches, what is your estimate of callahan'k cost of commen equity? Do not round ititiermedinte calculations, Reshe your answer to two decimal places. The future earrings, dividends, and common ttock price of Callahan Technalogles Inc, are expected to gtow 5 wh per year. Colleharts corrmen stock currently sells for \$28.00 per share; its last drvoend was $2.20; and it mill pay a $2.31 dividend at the end of the current year, a. Using the DCF approech, what is its cost of common equity? Do not round intermediate calcusotions. Round your ardwer to two decimal places. b. It the firm's beta is 2.0, the risk-free rete is 4%, and the average retum on the market is 14%, ahat will be the firmis cost of cornmin equity caing the CAPM approoch? Round your ancher to two cecimal pleces. descussed in 5ection 10-5 in your calculations. Round your answer to two cecims places. di. If you tave equil contidench in the inputs used for the three approaches, what is your estinate of Calshan's cont of common equity? Do not round interinediate calcilations. Round your answer to two decinat ploces Step by Step Solution
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