What is your best estimate of the company cost of equity

Assignment Help Financial Management

Reference no: EM131894459

Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 6 percent, and T-bills are currently yielding 5.3 percent. The company’s most recent dividend was $1.70 per share, and dividends are expected to grow at an annual rate of 5 percent indefinitely.

If the stock sells for $35 per share, what is your best estimate of the company’s cost of equity? (Hint: As you have two approaches, calculate each and take the average as your "best estimate".)

Cost of Equity? ____%

Reference no: EM131894459

Questions Cloud

What annual nominal rate would produce the same growth : A $10,000 investment in a growth-oriented mutual fund over a recent 10-year period would have grown to $126,000. What annual nominal rate would produce

What type of experimental design would you use : A tire dealer has three service personnel that install tires on the same shift. The quality department records the service times and would like to determine.

Calculate the cost of goods manufactured : Calculate the cost of goods manufactured? Which items in the cost incurred should be included in the manufactured overhead

Find the probability that x assumes a value less than 43 : Let x be a continuous random variable that is normally distributed with a mean of 65 and a standard deviation of 15. Find the probability that x assumes.

What is your best estimate of the company cost of equity : If the stock sells for $35 per share, what is your best estimate of the company’s cost of equity?

Capital for the individual components in capital structure : Compute the cost of capital for the individual components in the capital structure.

What is the concentration of the drug in the blood stream : When a certain prescription drug is taken orally by an adult, the amount of the drug (in mg/l) in the blood stream at t hours is given the function y

Determine the average cycle time for each element : A time study was conducted on a job that contains four elements. the observed times and performance ratings for six cycles are shown in the following table.

What is the probability that it is a blue-glass marble : A marble is selected at random from the bag. What is the probability that it is a blue, glass marble? Answer as a fraction in simplest form.

User Account

All Pages