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 0.90. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent. CDB's most recent dividend was $1.90 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely.

Required:

Question: If the stock sells for $41 per share, what is your best estimate of CDB's cost of equity?

Note: Provide support for your rationale.

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Accounting Basics: Estimate of cdb cost of equity

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Accounting Basics: Estimate of cdb cost of equity

Reference No:- TGS0892118

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Request for Solution File

Ask an Expert for Answer!!

Accounting Basics: Estimate of cdb cost of equity

Reference No:- TGS0892118

Recent Questions Asked Accounting Basics

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