The equipment has an estimated useful life of ten years and an expected salvage value of 20 percent. Gravity Hospital’s December
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The required rate of return on the stock of Dell company is come out to be 8.89%.
<h3>What is a stock?</h3>Stock represents the number of shares being owned by an investor in the company on which it gets the dividends.
Given values for step 1:
The required rate of return: 12%
Beta factor: 1.40
Risk-free rate: 4.75%
<u>Step-1</u> Computation of market risk premium:
Given values for step 2:
Market risk premium: 5.18%
Beta factor: 0.80
Risk-free rate: 4.75%
<u>Step-2</u> Computation of required rate of return:
Therefore, the return of 8.89% comes out to be the required rate of return for the stock of Dell Company.
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