Question
Use the average of the dividend growth and CAPM methods to estimate the firms cost of equity. Firm ABC just paid a quarterly dividend of
Use the average of the dividend growth and CAPM methods to estimate the firms cost of equity.
Firm ABC just paid a quarterly dividend of 0.22 per share, the dividends are expected to grow at 4% APR compounded quarterly, and the stock price is $15 per share. Additionally, the stock has =1.2=1.2 while the risk-free rate is 2% and the expected market premium is 9% (all per annum). What is the firm's cost of equity (stated as an EAR)?
A firm is expected to pay a quarterly dividend of 0.32 per share in 3 months, the dividend growth rate is 4% APR compounded quarterly, and the stock price is $15 per share. Additionally, the stock has =1.2=1.2 while the risk-free rate is 2% and the expected market premium is 9% (all per annum). What is the firm's cost of equity (stated as an EAR)?
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
Business Ethics A Stakeholder And Issues Management Approach
Authors: Joseph W. Weiss
7th Edition
1523091541, 978-1523091546
