Question
The earnings, dividends, and stock price of ABC Inc. are expected to grow at 6% per year in the future. ABCs common stock sells for
The earnings, dividends, and stock price of ABC Inc. are expected to grow at 6% per year in the future. ABCs common stock sells for $44 per share, its last dividend was $4.50 per share, its beta is 1.3, the risk-free rate is 4%, and the expected return on the market is 13.75%.
What is the firms cost of equity based on the CAPM approach?
| 14.26% |
| 16.84% |
| 16.68% |
| 14.50% |
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Fundamentals Of Financial Management
Authors: James C. Van Horne
10th Edition
0138596875, 9780138596873
