What is your best estimate of CDBs cost of equity

Assignment Help Financial Management

Reference no: EM131082787

Stock in CDB Industries has a beta of 1.06. The market risk premium is 7.1 percent, and T-bills are currently yielding 4.1 percent. CDB’s most recent dividend was $3.00 per share, and dividends are expected to grow at a 5.1 percent annual rate indefinitely.

Required: If the stock sells for $52 per share, what is your best estimate of CDB’s cost of equity?

(Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Reference no: EM131082787

Questions Cloud

The stock goes ex-dividend tomorrow : You purchased a stock today. What should you expect if the stock goes ex-dividend tomorrow? A dividend will be paid tomorrow. The stock price should decline tomorrow. The stock price has already adjusted for the next dividend payment. A dividend will..

What is the net cash flow of the project for the year : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,130,000. The fixed asset falls into the three-year MACRS class (MACRS Table). What is the net cash flow of the project for the fo..

Considering buying machine-What is the NAL of the lease : Super Sonics Entertainment is considering buying a machine that costs $660,000. The machine will be depreciated over four years by the straight-line method and will be worthless at that time. The company can lease the machine with year-end payments o..

Consider re-captured depreciation and its tax treatment : J.B. Corporation is considering the purchase of equipment that has an invoice price of $450,000. The equipment was recommended by a consulting firm that did an analysis for J. B. Corporation. J. B. paid the consulting firm $12,000 for its report. Cal..

What is your best estimate of CDBs cost of equity : Stock in CDB Industries has a beta of 1.06. The market risk premium is 7.1 percent, and T-bills are currently yielding 4.1 percent. CDB’s most recent dividend was $3.00 per share, and dividends are expected to grow at a 5.1 percent annual rate indefi..

Find the annual worth of the project : An investment to modernize a distribution center is being considered. Specified automated storage and retrieval equipment has been proposed for the storage of pallet loads of product. The building has a projected life of 30 years, and the storage/ret..

Calculate interest rate that udwellum should pay on bonds : Suppose that a corporate bond with a Baa credit rating and five years to maturity has a yield to maturity of 8 percent. Suppose that the government of the city of Udwellum, which has a Baa credit rating, issues a bond with the dame time to maturity i..

Expansion project that requires an initial fixed asset : Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.97 million. The fixed asset falls into the three-year MACRS class. If the tax rate is 35 percent and the required retu..

User Account

All Pages