Question
You have assigned the following values to these three firms: -----------------------------Price-------------Upcoming Dividend------Growth------Beta US Bancorp------------$36.55-------------------$1.60-------------------10.0%-------1.8 Praxair--------------------64.75---------------------1.12--------------------11.0---------2.4 Eastman Kodak--------24.95----------------------1.00---------------------4.5---------0.5 Assume that the market portfolio will earn 12
You have assigned the following values to these three firms:
-----------------------------Price-------------Upcoming Dividend------Growth------Beta
US Bancorp------------$36.55-------------------$1.60-------------------10.0%-------1.8
Praxair--------------------64.75---------------------1.12--------------------11.0---------2.4
Eastman Kodak--------24.95----------------------1.00---------------------4.5---------0.5
Assume that the market portfolio will earn 12 percent and the risk-free rate is 3.5 percent.
Compute the required return for each company using both CAPM and the constant-growth model.(Do not round intermediate calculations and round your final answer to 2 decimal places.)
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