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pls help!! much thanks will thumbs up pls help!! will thumbs up! 1. (25 points) You are a new employee of the Scannell Poultry Processing
pls help!! much thanks will thumbs up
pls help!! will thumbs up!
1. (25 points) You are a new employee of the Scannell Poultry Processing Company and as a part of your training, you are asked to determine the cost of equity capital (retained eamings) for the fimm. You observe that the latest (2020) dividend per share is (Do 4.70), the stock price is $100, and the annual earnings per share have been EPS 2015 $7.84 2016 8.32 2017 883 2018 937 2019 9 94 2020 10.55 Also, you observe that the current 10-year U.S. treasury rate is 0.83 percent and according to Pablo Fernandez, et.al., the average US stock market risk premium (stock market retum less yield on 10-year US Treasuries) used by investors is 5.5 percent. The beta for Scannell is 1.869. Also, use the annual compound growth rate for EPS for the 5-year period from 2015-2020 to estimate the firm's grow rate. A What is your estimate for the cost of retained earnings? Use both the DCF and the CAPM models in your estimates B. What is your estimate for the cost of retained earnings? Use both the DCF and the CAPM models in your estimates DCF Model r. - D/P, +g 1. = 4.9875/100+0.061176=0.1110511.105% I CAPM Model te=5+ [5.5%) CAPM: 1. C. Given a transaction (flotation) costs of 5% for newly issued common stock, what is the percentage cost of new-issue common stock for Scannell? DCFStep by Step Solution
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