Question
Riddle Industries has the following parameters related to its stock and firm. Beta: 1.5 Recent Dividend 0.70 dollars Dividend Growth Rate 4.5 percent Expected return
Riddle Industries has the following parameters related to its stock and firm.
| Beta: | 1.5 |
| Recent Dividend | 0.70 dollars |
| Dividend Growth Rate | 4.5 percent |
| Expected return on market | 12.5 percent |
| Treasury Bills Yield | 4.3 percent |
| Most recent stock price | 64.00 dollars |
What is the cost of equity using DDM? What is the cost of equity using SML?
A. 5.64 percent, 16.60 percent
B. 5.44 percent, 12.30 percent
C. 4.5 percent, 12.50 percent
D. 5.72 percent, 16.60 percent
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Financial Accounting For Decision Makers
Authors: Dr Peter Atrill, Eddie Mclaney, Sin Autor
5th Edition
1405888210, 9781405888219
