Question
The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4% per year in the future. Shelby's common stock sells for
The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4% per year in the future. Shelby's common stock sells for $24 per share, its last dividend was $2.50, and the company will pay a dividend of $2.60 at the end of the current year. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. 14.83 % If the firm's beta is 1.9, the risk-free rate is 6%, and the expected return on the market is 10%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. 13.60 %
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