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To estimate the cost of equity for Procter & Gamble, go to finance.yahoo.com and enter...

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Finance

To estimate the cost of equity for Procter & Gamble, go to finance.yahoo.com and enter the ticker symbol PG. Follow the various links at this website to find answers to the following questions:

What is the most recent stock price (and provide the associated date) listed for Procter & Gamble?

What is the market value of equity, or market capitalization?

How many shares of stock does Procter & Gamble have outstanding?

What is the beta for Procter & Gamble?

Now go back to finance.yahoo.com and follow the Bonds link. What is the yield on three-month Treasury bills? Using a 7 percent market risk premium, what is the cost of equity for Procter & Gamble using the CAPM?

Go to www.reuters.com and find the list of competitors in the industry. You can do this by clicking on the search symbol, then enter Procter & Gamble. The list of competitors is available when you click on Overview in the horizontal menu. Use U.S.-based competing companies for this task.

Find the beta for each of these competitors, and then calculate the industry average beta.

Using the industry average beta, what is the cost of equity?

Does it matter if you use the beta for Procter & Gamble or the beta for the industry in this case?

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