Answer:
30.92%
Explanation:
Use CAPM (Capital Asset Pricing Model) to find the cost of equity;
cost of equity ;r = risk free rate + Beta (Market Risk Premium)
risk free rate = 4.90% or 0.049 as a decimal
Beta = 2.8
Market Risk Premium = 8.56% or 0.0856 as a decimal
Next, plug in the numbers to the above CAPM formula;
r = 0.049 + 2.8(0.0856)
r = 0.049 + 0.23968
r = 0.2887 or 28.87%
Therefore, cost of equity using CAPM is 28.87%
Next. find cost of equity using Dividend growth model ;
r = (D1/P0) +g
r = (3/13.65) + 0.11
r = 0.2198 + 0.11
r = 0.3298 or 32.98%
Cost of equity using Dividend growth model is 32.98%
Find the average of the two to find the cost of equity of this stock;
= (28.87% + 32.98%) /2
= 61.85%/2
= 30.92%
<span>A life insurance
policy can either be a participating policy where the policy pays the dividend
or it can be a nonparticipating policy where the policy has guaranteed premiums. About 95% of the U.S. life insurance
companies are stock companies.</span>
Answer:
$1,323
Explanation:
The computation of the gross pay for the employees is shown below;
Gross pay = ( Hours worked × Hourly rate ) + (Hours worked - excess worked hours) × Hourly rate × half yearly basis
= (46 hours × $27 ) + (46 hours - 40 hours) × $27 × 0.50
= $1,323
We simply applied the above formula to determine the gross pay for the employee without deducting any kind of taxes given in the question.
Answer:
Excess return=0.1575=15.75%
Explanation:
Given Data:
Stock R beta=2.5
Stock S beta=0.25
return on an average stock=10%
the risk-free rate of return=3%
Required:
Excess return=?
Solution:
Difference in beta=Stock R beta-Stock S beta
Difference in beta=2.5-0.25
Difference in beta=2.25
Market Premium= return on an average stock-the risk-free rate of return
Market Premium=10%-3%
Market Premium=7%
Excess return=Market Premium*Difference in beta
Excess return=7%*2.25
Excess return=0.07*2.25
Excess return=0.1575=15.75%
Answer:
The current share price is $37.49(appx)
Explanation:
Consider the following calculations
current share price
= 5/(1+0.14) +12/(1+0.14)^2 + 18/(1+0.14)^3+1.8/(1.0.14)^4+1.8/(0.14-0.04)*(1+0.14)^4
=4.386+9.233+12.15+1.065+10.657
=$37.49 (appx)
