1. Stock in Country Road Industries has a beta of 0.77. The market risk premium...
70.2K
Verified Solution
Link Copied!
Question
Finance
1. Stock in Country Road Industries has a beta of 0.77. The market risk premium is 9 percent, and T-bills are currently yielding 5 percent. The companys most recent dividend was $1.6 per share, and dividends are expected to grow at a 7 percent annual rate indefinitely. If the stock sells for $44 per share, what is your best estimate of the companys cost of equity in percentage? Use the CAPM.
2.
| Calculating Cost of Equity. Stock in Country Road Industries has a beta of 0.77. The market risk premium is 9 percent, and T-bills are currently yielding 5 percent. The companys most recent dividend was $1.6 per share, and dividends are expected to grow at a 7 percent annual rate indefinitely. If the stock sells for $44 per share, what is your best estimate of the companys cost of equity? Use the Gordons constant dividend growth model. Ans: % |
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.