Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

These answers are correct just dont know how to do the work behind them. Thanks Musical Charts just paid an annual dividend of exist2.45 per

image text in transcribedThese answers are correct just dont know how to do the work behind them. Thanks

Musical Charts just paid an annual dividend of exist2.45 per share. This dividend is expected to increase by 3.3 percent annually. Currently, the firm has a beta of 1.09 and a stock price of exist36 a share. The risk-free rate is 4.2 percent and the market rate of return is 12.6 percent. What is the cost of equity capital for this firm? A. 10.28 percent B. 11.84 percent C. 12.29 percent D. 12.95 percent E. 13.42 percent The Cracker Mill has a beta of 0.97, a dividend growth rate of 3.2 percent, a stock price of exist33 a share, and an expected annual dividend of exist1.06 per share next year. The market rate of return is 11.2 percent and the risk-free rate is 3.7 percent. What is the firm's cost of equity? A. 7.74 percent B. 8.69 percent C. 9.30 percent D. 9.72 percent E. 10.01 percent The market rate of return is 14.8 percent and the risk-free rate is 4.45 percent. Galaxy Co. has 54 percent more systematic risk than the overall market and has a dividend growth rate of 5.5 percent. The firm's stock is currently selling for exist39 a share and has a dividend yield of 3.6 percent. What is the firm's cost of equity? A. 14.73 percent B. 15.31 percent C. 15.82 percent D. 16.28 percent E. 16.73 percent Appalachian Mountain Goods has paid increasing dividends of exist.0.12, exist0.18, exist0.20, and exist0.25 a share over the past four years, respectively. The firm estimates that future increases in its dividends will be equal to the arithmetic average growth rate over these past four years. The stock is currently selling for exist12.60 a share. The risk-free rate is 3.2 percent and the market risk premium is 9.1 percent. What is the cost of equity for this firm if its beta is 1.26? A. 14.34 percent B. 16.91 percent C. 19.78 percent D. 22.96 percent E. 24.03 percent

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

Short Term Financial Management

Authors: Ned C Hill

1st Edition

0023548207, 978-0023548208

More Books

Students also viewed these Finance questions

Question

Discuss the key people management challenges that Dorian faced.

Answered: 1 week ago

Question

How fast should bidder managers move into the target?

Answered: 1 week ago