Question
You have assigned the following values to these three firms: Upcoming Dividend Estee Lauder Kinco Realty Nordstrom Price $33.00 70.00 9.50 $0.70 1.21 2.00
You have assigned the following values to these three firms: Upcoming Dividend Estee Lauder Kinco Realty Nordstrom Price $33.00 70.00 9.50 $0.70 1.21 2.00 Growth 10.50% 15.00 5.00 Beta 0.69 1.56 0.99 Assume that the market portfolio will earn 15.90 percent and the risk-free rate is 4.90 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 answers to 2 decimal places.)
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The formula to calculate the required value using the CAPM model is given below Expected returnRfBetaRmRf Calculate the required return for EL firm us...Get Instant Access to Expert-Tailored Solutions
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Understanding Basic Statistics
Authors: Charles Henry Brase, Corrinne Pellillo Brase
6th Edition
978-1133525097, 1133525091, 1111827028, 978-1133110316, 1133110312, 978-1111827021
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