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A stocks last dividend was 080 and dividends grow at 5 the

A stock's last dividend was $0.80 and dividends grow at 5%; the stock's price is $61. In addition, the stock's beta is 1.50, the risk free rate is 5.5%, and the return on the market is 12%.

a. Calculate the cost of equity using the dividend growth model approach.

b. Calculate the cost of equity using the security market line (CAPM) approach.

c. Why are the two costs of equity so different?

d. Does this say anything about the stock's price?

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Finance Basics: A stocks last dividend was 080 and dividends grow at 5 the

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Finance Basics: A stocks last dividend was 080 and dividends grow at 5 the

Reference No:- TGS0631580

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: A stocks last dividend was 080 and dividends grow at 5 the

Reference No:- TGS0631580

Recent Questions Asked Finance Basics

Q : A contestant on survivor is challenged to find buried

Q : Calculate wt of c h and o in the compound and find the

Q : The convention of arbitrarily assigning a zero enthalpy

Q : Which step of the writing process are you currently working

Q : A stocks last dividend was 080 and dividends grow at 5 the

Q : Prove the hypothesis if the enzyme binds more tightly to

Q : Given the 16-bit value 1010 0101 1001 1000 what operation

Q : Design a non-inverting op-amp with a bandwidth of 20khz

Q : Evaluate a patientrsquos intake amp expenditure determine

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