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user100 [1]
3 years ago
6

Stock in Daenerys Industries has a beta of 1.3. The market risk premium is 6 percent, and T-bills are currently yielding 5 perce

nt. The company’s most recent dividend was $2.00 per share, and dividends are expected to grow at an annual rate of 8 percent indefinitely. If the stock sells for $36 per share, what is your best estimate of the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Nadya [2.5K]3 years ago
8 0

Answer:

13.4%

Explanation:

According to the scenario, computation of the given data are as follows:-

Div1 = Dividend Price Per Share × (1 + G)

= $2 × (1 + 8%) = $2 × (1 + 0.08) = $2 × 1.08

= $2.16

As Per Growth Model Cost of Equity = (Div1 ÷ Current Price) +Growth Rate

= ( 2.16 ÷ $36) + 0.08 = 0.06 + 0.08 = 0.14 Or 14%

As Per CAPM Cost of Equity = Risk Free Rate + (Beta × Market Risk Premium)

= 5 + (1.3 × 6) = 5% + 7.8%

= 12.8%

Best Estimate of the Company’s Cost of Equity = (As Per Growth Model Cost of Equity + As Per CAPM Cost of Equity) ÷ 2

= (14% + 12.8%) ÷ 2

= 26.8% ÷ 2

= 13.4%

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anastassius [24]

Answer:

$40,000

Explanation:

Cash flow from financing activities;          Amount in $

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3 0
3 years ago
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dybincka [34]
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5 0
3 years ago
The amount of interest is determined by multiplying the amount in savings by the:
beks73 [17]
I think the most appropriate answer would be B.


I hope it helped you!
5 0
3 years ago
The elements of a brand that cannot be spoken are called the ______.
Mariulka [41]

The elements of a brand that cannot be spoken are called the brand mark.

Every band has its properties and elements such as the brand name and

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These elements are usually unique and helps to describe the brand and its

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However , the brand mark is like a logo and contains pictorial properties

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Read more on brainly.com/question/25243470

6 0
2 years ago
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alukav5142 [94]

Answer:

(B) Leave his portfolio the way it is now

Explanation:

Bond value and market interest rates are inversely related. When the market interest rates are expected to decline and an investor already holds a bond with fixed rate of interest, the value of such bonds shall rise.

Market interest rates refer to the rate of interest other firms are offering on similarly priced bonds. Thus market interest rate also implies investor expectations i.e YTM (yield to maturity) which is used as a discounting factor to ascertain the price of a bond.

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6 0
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