1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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%.

You might be interested in
Pls be nice and answer this for me. in the middle of a test. 50 pts!
Roman55 [17]

Answer:

c

Explanation:

nate should have chosen to ask the supplier for verification for the requisition order

3 0
2 years ago
Read 2 more answers
As a sole proprietor, what are the ways in which you can raise money to establish your business, and make it grow?
kolezko [41]

Answer:

Take out a small business loan.

Explanation:

A small loan is a way, based on your credit, to establish a way to raise money.

3 0
3 years ago
Brown Corp., a calendar-year taxpayer, was organized and actively began operations on July 1, 2013, and incurred the following c
PolarNik [594]

Answer:

The amount of amortized organizational expenses for the year 2013 would be $6,333 ( approximately )

Explanation:

First of all the important point here to note is that while calculating the amortized organizational cost we only include the legal fee for drafting the corporate charter and not the commission paid to underwriter or cost incurred while selling the stock.

In the legal fee for corporate charter too there are limitations , as only $50,000 are allowed as total expenditure to be amortized over a period of 15 years or 180 months. Where for the first year the limitation allowed is $5000 and rest of the amount would be amortized over 180 months.

So $45,000 - $5000 = $40,000

$40000 / 180 = $222.22

Now multiplying this by 6 months as the operations of company began on 1 July , 2013,

$222.22 x 6 = $1333.32

Now adding this amount to $5000 will give us the total amortized organizational expense,

$5000 + $1333.32 = $6,333.32

= $6,333 ( approximately )

7 0
3 years ago
when an account holder uses a debit card to pay for a purchase at the point of sale, a. money is immediately taken out of the ch
larisa86 [58]
<span>c. money is deducted from the balance on the debit card.</span>
7 0
2 years ago
When countries specialize in the production of goods they have the comparative advantage in, both ___________ and ______________
Anna71 [15]

Based on the question above, <u>demand and supply</u> will increase.

<h3>Demand</h3>
  • demand is the quantity of a good that consumers are willing and able to buy at various prices during a given period of time.

<h3>Supply</h3>
  • supply is the amount of a resource that firms, manufacturers, labourers, providers of financial assets, or other economic agents are willing and able to provide to the marketplace or to an individual.

Therefore, the correct answers are demand and supply.

Learn more here:https://brainly.in/question/19402695

7 0
2 years ago
Other questions:
  • Assume that a profit maximizing monopolist is producing a quantity such that marginal revenue exceeds marginal cost. we can conc
    13·1 answer
  • What is the primary importance of benefits 1 and 2 as discussed in "The Pros and Cons of Patents"
    9·2 answers
  • Why does Maureen Riehl state that internet retailers have an "unfair price advantage" when they don't collect sales tax from out
    5·1 answer
  • Julie is developing a budget for her firm's IMC program. First she sets objectives. Then she chooses media, and finally she dete
    6·1 answer
  • Sometimes labor unions try to increase the demand for the product they produce. They do so because the demand for labor is deriv
    14·1 answer
  • Which of the following is a positive economic​ statement? A. Everyone should live at the same standard of living. B. If the pric
    8·1 answer
  • Which transaction would cause one asset to increase and another asset to decrease?
    5·1 answer
  • A formal agreement between separately owned and controlled facilities to officially coordinate and share certain activities is m
    12·1 answer
  • Which of the following is true of accrual basis accounting and cash basis​ accounting? A. Cash basis accounting records all tran
    7·2 answers
  • A series of 10 end-of-year deposits is made that begins with $5,000 at the end of year 1 and decreases at the rate of $300 per y
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!