Question
Smith Technologies Corporation has a constant growth rate of 3% per year and its stock currently sells for $27 a share.The last dividend was $1.50.The
Smith Technologies Corporation has a constant growth rate of 3% per year and its stock currently sells for $27 a share.The last dividend was $1.50.The firm's beta is 1.3, the risk-free rate is 4%, and the average return on the market is 8%.Using the discounted cash flow method (or discounted dividend), what is the estimated cost of common equity?Using the CAPM approach, what is the estimated cost of common equity?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
