Problem 1 :

Answer the following questions regarding company RIM.

Consider the following information for company RIM:

Current market price per share	$50.00
Most recent dividend paid per share	$2.00
Expected dividend payout rate	50%
Return on equity	10%
Beta coefficient for common stock	1.00
Expected return on the market portfolio	9%
Return on government treasury bills	3%

Using the discounted cash flow/dividend growth model, what is the cost of equity capital for RIM?

Using the Capital Asset Pricing Model (CAPM) approach, what is the cost of equity capital for RIM?