--%>
Assignment Help - homework help

Using the DCF method, calculate the cost of equity

Your Corp, Inc.'s data is as follows:
Beta; 1.30
Recent dividend; $.90
Expected dividend growth; 7%
Expected return of the market; 14%
Treasury Bills are yielding; 4%
Most recent stock price; $65

A] Using the DCF method, calculate the cost of equity.
B] Using the SML method, calculate the cost of equity.
C] The answers in [A] and [B] are very different. Why?

 

   Related Questions in Corporate Finance

  • Q : Problem on required rate of return

    Tudor Online Publishing Corporation has tax rate of 35%, debt-to-equity ratio of 25%, and has (leveraged) beta 1.25. The riskless rate is 3% and the market return is 12%. Windsor Publishing Company is an all equity company and is in the same business. What is the requ

    		•
  • Q : Intrnational financer what are the

    what are the objectives of international finance

    		•
  • Q : Illustrates financial consultant has

    A financial consultant obtains various valuations of my company when this discounts the Free Cash Flow (FCF) as opposed to when this uses the Equity Cash Flow. Is it correct?

    		•
  • Q : Calculate their after tax cost of debt

    Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of whichrequire semiannual interest payments. Bond A has a coupon rate of 4.0%; a price qu

    		•
  • Q : What is the Capital Cash Flow What is

    What is the Capital Cash Flow?

    		•
  • Q : Explain the branching structure of the

    Explain the branching structure of the binomial model.

    		•
  • Q : Expected return and standard deviation

    If an investor is considered to be risk-averse, what is his/her attitude towards expected return and standard deviation?

    		•
  • Q : Active versus Passive fund managers

    Active vs. Passive fund managers: Passive fund managers adopt a long term buy and hold strategy. Usually, stocks are purchased so that the portfolio’s returns will track those of an

    		•
  • Q : Explain Straddle and Strangle Straddle

    Straddle & Strangle: In the case of shorting butterfly spread, it can be seen that the gains are limited. However, there exists another strategy known as straddle which produces unlimited gains. This strategy benefits when the trader expects that

    		•
  • Q : Is cash flow is a flow of cash to

    The often known as "cash flow" that is net income plus depreciation, is a flow of cash, but is this a flow to the company or to the shareholders?

    		•