Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The future eamings, dividends, and common stock price of Caliahan Technologies Inc. are expected to grow 8% per year. Calahan's common stock currently seils for

image text in transcribed
The future eamings, dividends, and common stock price of Caliahan Technologies Inc. are expected to grow 8% per year. Calahan's common stock currently seils for $29. share; its last dividend was $1.50; and it will pay a $1.62 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. The b. If the firm's beta is 1.9, the riskfree rate is 8%, and the average retum on the market is 12%, what will be the firm's cost of common equity using the CapM appr Round your answer to two decimal places. c. If the firm's bonds earn a return of 11%, based on the bond-yield-plus-fhk-premium approach, what will be fu? Use the judgmental risk premium of 4% in your. calculations. Round your answer to two decimal places. d. If you have equal cenfidence in the inputs used for the three approaches, what is your estimate of Caliahan's cost of common equity? Do not round intermediate chloulations. Round your answer to teo decimal places

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

Fundamentals Of Water Finance

Authors: Michael Curley

1st Edition

1498734170, 978-1498734172

More Books

Students also viewed these Finance questions

Question

politeness and modesty, as well as indirectness;

Answered: 1 week ago