Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
The future earnings, dividends, and common stock price of Cailahan Technologies inci are expected to graw 5% per year, Callahan's cemmon stock cimentiy seils for
The future earnings, dividends, and common stock price of Cailahan Technologies inci are expected to graw 5% per year, Callahan's cemmon stock cimentiy seils for $26.60 per thare; its last dividend was $2.40 j and it will pay a $2.52 dividend at the end of the current year. a. Using the DCF aporoach, what is its cost of common equity? Do not round intermediate calculetiens, Round your answer to two decinal risces. We b. If the fim's beta is 0.8, the risk-free rate is 5%, and the average return on the market is t3\%, what will be the firm's cott of commen equity using the capM approach? found your answer to two decimal plsces. We c. If the firm's bonds earn a return of 12%, based on the bond-yleid-plus-risk-premium approbch, what will be ra? Use the judgmental risk premilam of 4% in your calculations. Found your answer to two decimal places. d. If you have eaus confidesce in the inouts used for the three approaches, what is your eseimate of Calahans cost af common equry? Do not round intermedfate calculationis, Round your answer to two decmal places
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started