Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The future carings, dividends, and common stock price of Collaan Technologies the respected to grow per year. Calabar's con stock currently as for per les

image text in transcribed
image text in transcribed
The future carings, dividends, and common stock price of Collaan Technologies the respected to grow per year. Calabar's con stock currently as for per les dividend wat 12.30, and it will dividend at the end of the current year . Using the DC pproach, what is the cost of common cauty Round your answer to two decimal places. Do not round your intermediate actions If the firm's beta is 2.10, the risk treenate 36%, and the average return on the market is 10%, what will be the score common tying the CAM approach Round your answer to two decimal www's bords an arturs of Inn, based on the bondelik presumporach, what will be in the midst of the risk premium angeded in action 105 in your contend you wower to two decimal places The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $21.75 per share; its last dividend was $2.20; and it will pay a $2.31 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations. % b. If the firm's beta is 2.10, the risk-free rate is 6%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. 96 C. If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be r.? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places, % d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Catechism Of Money

Authors: Joseph P. Root

1st Edition

1377114929, 978-1377114927

More Books

Students also viewed these Finance questions

Question

Identify three levels of management

Answered: 1 week ago