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Veronika [31]
3 years ago
9

National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 a share. The divide

nd growth rate is 2.2 percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost of equity using the average return of the CAPM and the dividend discount model?
Business
1 answer:
ANEK [815]3 years ago
4 0

Answer:

9.6845%

Explanation:

Market risk premium = Market return - Risk free rate

                             7.3 = 11.2 - Risk free rate

Risk free rate = 3.9%

(1) Use CAPM:

Cost of equity = Risk free rate + Beta × Market risk premium

                        = 3.9% + 1.06(7.3)

                        = 11.638%

(2) Use DDM :

Stock price = [Latest dividend × (1 + dividend growth rate)] ÷ (Cost of equity-dividend growth rate)

$17 = [0.92 (1 + 0.022)] ÷ (Cost of equity - 0.022)

Cost of equity = 7.731%

Cost of equity = average value from using DDM and CAPM

Cost of equity = 0.5 (7.731 + 11.638)

                        = 9.6845%

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Answer:  

D. $23,500.

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Answer:

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2. C

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Explanation:

The US Gross Domestic Product (GDP) can be measured using the expenditure approach: Y = C + I + G + (X – M).  This expenditure approach calculates GDP by evaluating the sum of all final goods and services purchased in the US economy.  The components of the US GDP identified as “Y” in equation form include Consumption (C), Investment (I), Government Spending (G), and Net Exports (X – M) with X as exports and M as imports.

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A record store that sells $1,000 woth of CDs per day to 40 customers ( the average cost of goods sold per unit is $12.50) How mu
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$500

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COGS or the cost of goods sold is the total cost of all goods sold in a period. It is the direct cost of productions and include direct labor costs, direct materials, and direct overhead costs.

In this case, The average cost of goods sold per unit is $12.50. The business sells to 40 customers. The totals cost of goods sold or the COGS will be

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The first thing Cristina should do to create a more standards-oriented environment in her classroom is to create positive relationships with her students.

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It is necessary for the teacher to be organized according to the methodologies required by the institutional standard, as standardization generates the systematization of processes so that student learning and development occurs in a similar way, without bias, for example.

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As a sole proprietor, what are the ways in which you can raise money to establish your business, and make it grow?
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