Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 6. cost of common equity the future earnings, divi

6. COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Callahan...

50.1K

Verified Solution

Question

Accounting

6.

COST OF COMMON EQUITY

The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $24.50 per share; its last dividend was $2.50; and it will pay a $2.70 dividend at the end of the current year.

Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations. %

If the firm's beta is 1.40, the risk-free rate is 5%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. %

If the firm's bonds earn a return of 8%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. %

If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations. %

Answer & Explanation Solved by verified expert
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!
Become a Member

Other questions asked by students

Physics
1.2K views

Kn 28 Balmer gave an equation for wavelength of visible region of H spectrum as...

Statistics
1.2K views

Use the standard normal table to find the​ z-score that corresponds to the given percentile. If...

Biology
1.2K views

Describe these two techniques: co-immunoprecipitation and sandwich ELISA. For each technique, be sure to explain its...

Physics
1.2K views

Section A Previous Year Questions AIP sip Two containers of equal volume contain the same...

Basic Math
1.2K views

Solve the inequality. Graph the solution set, and write the solution set in set-builder notation...

Calculus
1.2K views

Identify a pair of alternate interior angles in the diagram Name th

Algebra
1.2K views

Chau needs 9534 for a future project He can invest 6000 now at an annual...

Accounting
1.2K views

The controller of Frizz D Ice Cream Co. instructs you to prepare a monthly cash...

Accounting
1.2K views

a) Pamton's plant wide MOH rate (based an Mactune nours) b) ABC rotes for each...

Accounting
1.2K views

Dismiss All Please click "CONTINUE" or "WAIT" if you receive an unresponsive warning. If you...

Accounting
1.2K views

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $254,500, terms n/30....

Finance
1.2K views

Ahmad are making $1,000 monthly deposits into a fund that pays interest at a rate...