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Calculate the cost of equity using the dividend growth

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Reference no: EM132742736

Cornwell Industries stock has a beta of 1.20. The company just paid a dividend of $0.99, and the dividends are expected to grow at 4%. The expected return on the market is 13%, and Treasury bills are yielding 4.7%. The most recent stock price for the company is $72.

Problem a. Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Problem b. Calculate the cost of equity using the SML method.

Reference no: EM132742736

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