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
Kobotan [32]
3 years ago
14

Stock in Daenerys Industries has a beta of 1.3. The market risk premium is 7 percent, and T-bills are currently yielding 4.5 per

cent. The company’s most recent dividend was $1.50 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?
Business
1 answer:
vesna_86 [32]3 years ago
7 0

Answer:

13.05%

Explanation:

Using CAPM Equation, Ke = Rf+Beta*(Rm-Rf)

= 0.045+1.3*(0.07)

= 0.136

= 13.60%

Using Dividend growth model, Ke = (D1/P0) + g

= (D0*(1+g)/P0) = g

= (1.50*(1+0.08)/36) + 0.08

= 0.125

= 12.50

The cost of equity (Ke) = 0.136 + 0.125 / 2

The cost of equity (Ke) = 0.261/2

The cost of equity (Ke) = 0.1305

The cost of equity (Ke) = 13.05%

You might be interested in
Which of the following would have no effect, either direct or indirect, on an organization's cash budget?
Black_prince [1.1K]

Answer: E. None of the above, as all of these items would have some influence

Explanation:

All of the options will be listed in the cash budget as they all have some influence in the the cash received (spent) by the company.

Sales revenue will be included as a cash inflow in the business whilst processional labor, advertising expenditure and raw material purchases will be cash outlays.

8 0
3 years ago
Determine whether each consequence of poor financial decisions is an initial consequence or a long-term
kaheart [24]
Where are the consequence examples? Need more context to answer this question
5 0
2 years ago
Read 2 more answers
Anyone wan na talk?????
valkas [14]

Answer:

Sure! What about?

Explanation:

3 0
2 years ago
Historical Art is a new business. During its first year of operations, credit sales were $50,000 and collections from credit sal
Harrizon [31]

Answer:

C. 1,500

Explanation:

Credit Sales x 3%

$50,000 x 0.03 = $1,500

8 0
2 years ago
I have question with it can you help me please??​
Simora [160]

Answer:

Pick-up Later:

Set a pickup date

Process the transaction

Place all the items in the pickup area near the front of the store

Place a note on the items indicating they are sold.

Explanation:

The purpose of the above procedure is to enable the customer to take delivery of purchased goods hitch-free.  The pick-up area needs to be covered against rain so that the mulch and topsoil do not degrade.  It is assumed that the customer's contact information and payment have been secured before the arrangement for pick-up later.

5 0
3 years ago
Other questions:
  • During the month of july, clanton industries issued a check in the amount of $845 to a supplier on account. the check did not cl
    15·2 answers
  • A company uses the indirect method to prepare the statement of cash flows. How will a gain from the sale of equipment be present
    11·1 answer
  • Butterfly tractors had $14 million in sales last year. cost of goods sold was $8.00 million, depreciation expense was $2 million
    6·1 answer
  • Neil places an advertisement for his pastry shop, Neil's Pastries, in the local newspaper. He includes his phone number, website
    11·1 answer
  • The chi-square goodness-of-fit test for multinomial probabilities with 5 categories has _____ degrees of freedom.
    7·1 answer
  • One column of numbers consists of 28, 42, and 14. When the digits of the numbers are added together, the result is 2 + 8 + 4 + 2
    11·1 answer
  • Describe the unique challenge marketers face when attempting to use differentiated marketing for different cultures and ethnicit
    10·1 answer
  • What type of forces accelerate masses?
    13·1 answer
  • George purchased a futures contract at 349. The contract is on 2500 units, requires a 10% margin deposit and is priced in cents
    12·1 answer
  • A falling price level is a symptom of an unhealthy economy, if prices have fallen due to _________. It is symptom of a healthy e
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!