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Calculate arithmetic and geometric growth rates in dividends

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Question: Cost of Equity. Go to finance.yahoo.com and look up the information for Allegheny Technologies (ATI), a metal manufacturing company in the S&P 500. You want to estimate the cost of equity for the company. First, find the current Treasury bill rate. Next, find the beta for Allegheny Technologies. Using the historical market risk premium, what is the estimated cost of equity for ATI using the CAPM? Now find the analysts' growth rate estimates for the next five years for the company. Using this growth rate in the dividend growth model, what is the estimated cost of equity? Now find the dividends paid by the company over the past five years and calculate the arithmetic and geometric growth rates in dividends. Using these growth rates, what is the estimated cost of equity? Looking at these four estimates, what cost of equity would you use for the company?

Reference no: EM131732747

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Calculate arithmetic and geometric growth rates in dividends : Cost of Equity. Go to finance.yahoo.com and look up the information for Allegheny Technologies (ATI), a metal manufacturing company in the S&P 500.
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