- +44 141 628 6080
- info@tutorsglobe.com

Assess the firms cost of equity

Problem: A company's EPS are $2.00 and has a 60% pay-out ratio. Dividends are expected to grow at 7% per year. Its stock beta is 1.2, the risk free rate is 6% and the average return on equity in the market is 12%.

1) What is the firm's cost of equity?

2) What is the most you should be willing to pay for a share of its stock?

Now Priced at $20 (50% Discount)

Recommended **(93%)**

1930094

Questions

Asked

3,689

Active Tutors

1438678

Questions

Answered

**
Start Excelling in your courses, Ask a tutor for help and get answers for your problems !! **

©TutorsGlobe All rights reserved 2022-2023.

## Q : Table of annual cash flows for the new investment

1. Prepare a table of annual cash flows for the new investment. Show your calculations in detail. 2. Calculate the payback period.