Estimate of cdb cost of equity, Accounting Basics

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Estimate of cdb cost of equity

Problem:

Stock in CDB Industries has a beta of .94. The market risk premium is 7.4 percent, and T-bills are currently yielding 4.4 percent. CDB's most recent dividend was $2.30 per share, and dividends are expected to grow at a 5.4 percent annual rate indefinitely. The stock sells for $45 per share.

Required:

Question 1: Using the CAPM, what is your estimate of CDB's cost of equity?

Question 2: Using the dividend discount model, what is your estimate of CDB's cost of equity?

Question 3: What is your best estimate of CDB's cost of equity?

Note: Please answer in proper manner and show all computations

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Accounting Basics: Estimate of cdb cost of equity

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Accounting Basics: Estimate of cdb cost of equity

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Recent Questions Asked Accounting Basics

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Accounting Basics: Estimate of cdb cost of equity

Reference No:- TGS0885744

Recent Questions Asked Accounting Basics

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