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You have assigned the following values to these three firms: Price Upcoming Dividend Growth Beta US Bancorp $ 51.35 $ 2.25 7.00 % 1.78 Praxair
You have assigned the following values to these three firms: |
Price | Upcoming Dividend | Growth | Beta | ||||||||||||
US Bancorp | $ | 51.35 | $ | 2.25 | 7.00 | % | 1.78 | ||||||||
Praxair | 41.60 | 1.55 | 20.50 | 1.96 | |||||||||||
Eastman Kodak | 43.15 | 2.00 | 8.40 | 0.84 | |||||||||||
Assume that the market portfolio will earn 11.00 percent and the risk-free rate is 4.00 percent. |
Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) |
CAPM | Constant-growth model | |
US Bancorp required return | % | % |
Praxair required return | % | % |
Eastman Kodak required return | % | % |
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