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Alik [6]
3 years ago
13

urrently sells for $69.57 per share and has a beta of .91. The market risk premium is 7.40 percent and the risk-free rate is 2.9

7 percent annually. The company just paid a dividend of $3.69 per share, which it has pledged to increase at an annual rate of 3.40 percent indefinitely. What is your best estimate of the company's cost of equity?
Business
1 answer:
masha68 [24]3 years ago
7 0

Answer:

Using Capital Asset Pricing Model

Ke= Rf +β(Market risk-premium)

Ke = 2.97 + 0.91(7.40)

Ke = 9.9%

Using Dividend Growth Model

Ke = Do<u>(1 + g) </u> + g

               Po

Ke = $3.69<u>(1 + 0.034)</u>  + 0.034

                    $69.57

Ke = $3.69<u>(1.034)</u> + 0.034

                  $69.57

Ke = 0.0548  + 0.034

Ke = 0.089 = 9%

The best estimate of the company's cost of equity is 9.9%

Explanation:

Cost of equity is a function of risk-free rate plus the product of beta and market risk-premium according to capital asset pricing model.

Using dividend growth model, cost of equity is a function of current dividend paid, subject to growth rate, divided by current market price plus growth rate.

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Equity financing (or funding) means ________.
Zanzabum

Answer:

A) exchanging partial ownership in a firm

Explanation:

Equity is the basic source of fund for any corporation, it the most initial phase in which equity is issued in exchange of a share of ownership in the company. For this the equity holder pays money to the company.

In this manner there is an ownership distributed for the share of money needed by the company.

This does not involve any statutory return payment on behalf of company in later future. As against it in case of loan, it needs to be repaid.

Equity form of funds do not demand any repayment.

7 0
3 years ago
Suppose that GDP is $50 million in 2015 but falls to $48 million in 2016, and that no changes in personal consumption expenditur
Minchanka [31]

<u>Solution and Explanation:</u>

GDP is calculated as follows:

Y = C + G + I + NX

where

C = Consumption

G = Government Expenditure

I = Investment

NX = Net Exports

It is mentioned that in 2015, GDP was 50 million and in 2016, it was 48 million without any change in the factors except NX. It means the net exports that is the difference between export and the import of the country has changed and it has fallen by 2 million.

8 0
3 years ago
10 POINTS PLEASE HELP ASAP
saul85 [17]

Answer:

I wanna say D

Explanation:

hope that helps

3 0
3 years ago
If you want to become a firefighter what are some steps you need to take to get there?
bearhunter [10]

Answer:

<h2>All the best :)</h2>

Explanation:

1: Make Sure You're Fit to be a Firefighter.

2: Meet the Requirements & Take the Tests.

3: Prepare for a Firefighting Career: Education Options.

4: Become Trained as an EMT.

5: Receive Firefighter Training at a Fire Academy.

6: Apply to Your Firefighting Dream Jobs.

3 0
3 years ago
A problem in developing effective compensation for teams is that: Multiple choice question. rewarding individuals erodes cohesiv
denpristay [2]

A problem in developing effective compensation for teams is that rewarding individuals erodes cohesiveness. Thus the first option is correct.

<h3>What is Cohesiveness?</h3>

Cohesiveness refers to the act or the property of togetherness. in the group , cohesiveness can be seen when the group performs the activity. It is important to have cohesiveness in every group for the accomplishment of the task.

When a individual in a group is provided a compensation it leads to dispute and chaos which erodes the cohesiveness of the group. Thus the first option is correct.

Learn more about Cohesiveness here:

brainly.com/question/13774781

#SPJ1

5 0
2 years ago
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