Question
There are answers for question 1, 2&4. They are all in BOLD. I am having issues with questions 3, 5, 6, 7, & 8. I
There are answers for question 1, 2&4. They are all in BOLD. I am having issues with questions 3, 5, 6, 7, & 8. I would really appreciate the help with these questions. Some of the questions require using some of the answers that are already provided. Please I would really appreciate the help. Thank youJ
- Please calculate CAPM of Asset J with the following information:
- where, kj = required return on asset j,
- Rf = risk-free rate of return, (6%)
bj = beta coefficient for asset j, (1.75)
Rm = market return. (10%)
The equation for CAPM is kj = Rf + [bj x (Rm - Rf)]
kj = Solve for required return on asset j (kj is CAPM)
ANSWER: kj = 6% +1.75 * (10% - 6%) =13%
2. Calculate the growth rate of Asset J dividends, we have to assume that future dividend payments will grow at a constant rate into the future forever. This constant rate can be estimated by calculating the average growth rate from the past dividends. Calculate Asset J
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