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Vadim26 [7]
3 years ago
14

Stock in Daenerys Industries has a beta of 1.1. The market risk premium is 7 percent, and T-bills are currently yielding 5 perce

nt. The company’s most recent dividend was $1.40 per share, and dividends are expected to grow at an annual rate of 7 percent indefinitely.
If the stock sells for $35 per share, what is your best estimate of the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Delicious77 [7]3 years ago
7 0

Answer:

The best estimate of the company’s cost of equity is 11.99%.

Explanation:

CAPM based required return = 5% + 1.1*7%

                                                 = 12.7%

Dividend model required return

35 = (1.40*1.07)/(r - 0.07)

r - 0.07 = 0.0428

          r = 11.28%

The best estimate of the company’s cost of equity is the mean of two = (12.7% + 11.28%)/2

= 11.99%

Therefore, The best estimate of the company’s cost of equity is 11.99%.

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8 0
3 years ago
The audit Mr. Chu is working on for a technology company is regulated. What does this mean?
Aliun [14]

It means that the technology company will use the audit results to analyze risks. Thus option A is correct.

<h3>What is Audit ?</h3>

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7 0
2 years ago
A company has a process that results in 34000 pounds of Product A that can be sold for $8 per pound. An alternative would be to
serg [7]

Answer:

After calculating, we get to know that the Product A should be sell now because, it show a difference of $23,800 through which company can earn more in the future. As the company will be better off by $23,800

Explanation:

For calculation, following things need to be considered which is shown below:

1. Product A process costing = Pounds × Per pound price

                                            = 34,000 × $8

                                            = $272,000

2. Product A costing after selling = Pounds × sale price per pound

                                                   = 34,000 × $14

                                                   = $476,000

3. Difference of costing :

=  Product A costing after selling - Product A process costing

= $476,000 - $272,000

= $204,000

4. Invested amount = $227,800

5. Actual Difference = Invested amount - costing difference

                                  = $227,800 - $204,000

                                  = $23,800

After calculating, we get to know that the Product A should be sell now because, it show a difference of $23,800 through which company can earn more in the future. As the company will be better off by $23,800

8 0
3 years ago
Question 1 (1 point)<br> Which of these is not expected when international trade occurs?
Triss [41]

Answer:

This is incomplete, I need the options to be able to answer this question

7 0
2 years ago
Which federal agency calculates the Consumer Price Index (CPI)?
Jet001 [13]
<span>U.S. Bureau of Labor Statistics</span>
6 0
3 years ago
Read 2 more answers
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