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Find best estimate of cost of equity if market risk is given

If the stock sells for $55 per share, what is your best estimate of CDB's cost of equity?

Stock in CDB Industries has a beta of 1.09. The market risk premium is 7.4 percent, and T-bills are currently yielding 4.4 percent. CDB's most recent dividend was $3.30 per share, and dividends are expected to grow at a 5.4 percent annual rate indefinitely.

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Finance Basics: Find best estimate of cost of equity if market risk is given

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find best estimate of cost of equity if market risk is given

Reference No:- TGS0552402

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Find current stock price-growth rate of dividend is constant

Q : Question regarding the financial plan

Q : Create an informative and dynamic introduction

Q : Efficiency variances for direct labor-direct materials

Q : Find best estimate of cost of equity if market risk is given

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find best estimate of cost of equity if market risk is given

Reference No:- TGS0552402

Recent Questions Asked Finance Basics

Q : Find current stock price-growth rate of dividend is constant

Q : Question regarding the financial plan

Q : Create an informative and dynamic introduction

Q : Efficiency variances for direct labor-direct materials

Q : Find best estimate of cost of equity if market risk is given

Q : Information on summary ratios for bank of america

Q : What would risk-free rate have to be for two stocks

Q : Summarize the paragraph

Q : Modern healthcare organization

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