Market risk premium-what is our cost of equity

Assignment Help Financial Management

Reference no: EM131324066

Suppose our company has a beta of 1.5. The market risk premium is expected to be 9% and the current risk-free rate is 6%. We have used analysts’ estimates to determine that the market believes our dividends will grow at 6% per year and our last dividend was $2. Our stock is currently selling for $15.65. What is our cost of equity? Using SML: RE = Using DGM: RE =

Reference no: EM131324066

Questions Cloud

Create a method in the customer class file : Create a Method in the Customer Class file that will sort the Customers by ID number when called from the main program. To do this, you will need to use an Interface as described in the programming notes below.

Identify and define three versions of put call parity : Using the Black-Scholes-Merton option pricing model and the generic carry formula for forward contracts (using continuous compounding), demonstrate that Ce(S0,T,X) = Ce(f0(T),T,X).

Prepare a plan to implement your choice : Prepare a case analysis for Case 1 and answer question 1/prepare diagram at the end of case 1 (include as an appendix to the case)

What is the cost of preferred stock : Suppose we have a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 9% and coupons are paid semiannually. The bond is currently selling for $908.72 per $1000 bond. What is the cost of debt? Your company has prefe..

Market risk premium-what is our cost of equity : Suppose our company has a beta of 1.5. The market risk premium is expected to be 9% and the current risk-free rate is 6%. We have used analysts’ estimates to determine that the market believes our dividends will grow at 6% per year and our last divid..

Find the width of the rankine oval created by the flow : Find the width (in the x-direction) of the Rankine oval created by the flow, and the pressure difference between a point at infinite distance upstream and the point of coordinates (1,1).

Company is expected to pay dividend : Suppose that your company is expected to pay a dividend of $1.50 per share next year. There has been a steady growth in dividends of 5.1% per year and the market expects that to continue. The current price is $25. What is the cost of equity? Suppose ..

Organizational visions statements of the two companies : Compare and contrast the mission and/or organizational visions statements of the two companies. What are the similarities and differences? How do you think these statements impact the culture of each organization?

Find the price of the futures contract : Find the price of the futures contract assuming that no arbitrage opportunities are present.- Find the value of θ, the cost of carry in dollars.

User Account

All Pages