Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 5 percent, and T-bills are currently yielding 4.2 percent. The company's most recent dividend was $1.40 per share, and dividends are expected to grow at an annual rate of 5 percent indefinitely. If the stock sells for $30 per share, what is your best estimate of the company's cost of equity?

Answers

Answer 1

Answer:

The best estimate of the company's cost of equity is 10.05%.

Step-by-step explanation:

Using growth rate model formula, the cost of equity can be calculated as follows:

Cost of equity as per growth rate model = (D1 / P) + g ................ (1)

D1 = Most recent dividend * (1 + g) = $1.40 * (1 + 0.05) = $1.47

P = Current price per share = $30

g = Growth rate of dividend = 5%, or 0.05

Substituting the values into equation (1), we have:

Cost of equity as per growth rate model = ($1.47 / $30 ) + 0.05

Cost of equity as per growth rate model = 0.099. or 9.90%

Using Capital Asset Pricing Model (CAPM) formula, the cost of equity can be calculated as follows:

Cost of equity as per CAPM = Risk free rate + (Beta * Market risk premium) = 4.2 + (1.2 * 5) = 10.20%

Therefore, we have:

Best estimate of Cost of equity = (Cost of equity as per growth rate model + Cost of equity as per CAPM) / 2 = (9.90% + 10.20%) / 2 = 10.05%

Therefore, the best estimate of the company's cost of equity is 10.05%.


Related Questions

If one side of a triangle is 87 and the other side is 52, what is the measurement of the other side?

Answers

Answer:

87+52=139 180-139 = 41

41 is the measurement of the other side

Step-by-step explanation:

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Area formula of a circle = πr2

π (8.5)2
Area= 226.98

it's is A= pi x r x 2^

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determine wether the equation is an identity or not an identity. sin theta/ cos theta

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Answer:

A

Step-by-step explanation:

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Answers

Answer:

17

Step-by-step explanation:

Well you have to get x by itself so....

subtract 8 from both sides

25 -8 = 17 there is your answer

Hey there!


x + 8 = 25

SUBTRACT 8 to BOTH SIDES

x + 8 - 8 = 25 - 8


SIMPLIFY IT!

x = 25 - 8

x = 17


Therefore, the answer should be: x = 17


Good luck on your assignment & enjoy your day!


~Amphitrite1040:)

I need help. Do not post a link to a site!

Find the value of each variable.

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Answer:

the answer is x=45⁰ y=45⁰

may I help you

what is 11 times 1/5

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Answer:

the answer is 2.2

Step-by-step explanation:

I used a calculator

Answer:

2 1/5 I guess

Step-by-step explanation:

If it's wrong then my phone's stu.pid

What is the equation of the line that passes through the point (-6,3) and has a
slope of -1/6?

Answers

Answer:

y = -1/6x + 2

Step-by-step explanation:

Put it in point-slope form:

y - 3 = -1/6(x + 6)

y -3 = -1/6x - 1

y = -1/6x + 2

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Answers

Answer:

30 inch²

Step-by-step explanation:

a + b/2 x h

8 + 10/2 X 5 = 30

Which statement accurately describes the graph 2y=4x+8?


IM IN A TEST HURRY PLEASE!!

Answers

You didn’t give us the statements, send a picture or something.

The statement which describes the given line the best is required.

The correct statement is an increasing line that passes through [tex](0,4)[/tex]

Equation of lines

The given equation is [tex]2y=4x+8[/tex]

Two points of the line are

[tex]x=0[/tex]

[tex]2y=0+8\\\Rightarrow y=4[/tex]

[tex](0,4)[/tex]

[tex]y=0[/tex]

[tex]0=4x+8\\\Rightarrow x=-2[/tex]

[tex](-2,0)[/tex]

The line passes through points [tex](0,4),(-2,0)[/tex]

The slope intercept form of the line is

[tex]y=\dfrac{4x+8}{2}\\\Rightarrow y=2x+4[/tex]

The slope is [tex]2[/tex]

Since, the slope is positive the line is increasing.

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A store purchased jeans for $15 a pair. The store increased the price of the jeans by 65%. One month later, the jeans were on sale for 15 - off the store price. How much would a customer pay for the jeans on sale? Please help

Answers

Answer:

$21.04

Step-by-step explanation:

Steps to take to derive the answer

Determine the price after the price increase of 65%Determine the price after the 15% off

Price after increase increase (100% + increase in price) x purchase price of the jeans

(100% + 65%) x 15

165% x 15

1.65 x $15 = $24.75

Price after the decrease in price = (100% - percentage decrease in price) x price after the 65% increase in price

(100% - 15%) x $24.75

85% x $24.75

0.85 x $24.75 = $21.04

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Answer:

B

Step-by-step explanation:

+/- 7 is the sq root of 49

hope this helps

Instructions: Find the missing length indicated.

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Answer:If you are following a area of a triangle is bxhx1/2 or bxh/2

1,800

Step-by-step explanation:100x36=3,600/2=1,800

Find the value or measure. Assume that all segments that appear to be tangent are tangent. Round answers to the nearest tenth, as needed.

Answers

Answer:

23.26

Steps:

AC=√(10²+21²)

AC=√(100+441)

AC=√541

AC≈23.26

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Answer:

Cut them in smaller shapes then find area

Step-by-step explanation:

Divide. (8x2 – 24x + 15) ÷ (2x – 5)

Answers

Answer:

31-24x/2x-5

Step-by-step explanation:

multiply: (16-24x+15)/(2x-5)

calculate: (31-24x)/(2x-5)

write the division as a fraction:  31-24x/2x-5

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Answer:

268.083

Step-by-step explanation:

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There are 12 boys and 13 girls in a class. If the teacher randomly chooses a student's name out of a hat, what is the probability it will be a girl?

◯ 48%
◯ 50%
◯ 52%
◯ 92%

Answers

The probability of selecting a girl is 52%

How to determine the probability?

The given parameters are:

Boy = 12

Girl =13

The probability of selecting a girl is:

P(Girl) = Girl/Total

This gives

P(Girl) = 13/(12 + 13)

Evaluate

P(Girl) = 52%

Hence, the probability it will be a girl is 52%


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Vanessa throws a tennis ball in the air. The function h(t) = -15t2 + 45t + 10 represents the distance in feet, that the ball is from the ground at any time in seconds, t. What is the maximum height of the ball?

Answers

Answer:

43.75feet

Step-by-step explanation:

Given the height of the tennis ball expressed as;

h(t) = -15t^2 + 45t + 10

At maximum height, the velocity of the ball is zero

v = dh/dt

dh/dt = -30t + 45

Since dh/dt = 0, hence;

0 = -30t + 45

30t = 45

t = 45/30

t = 3/2

t = 1.5secs

Substitute t = 1.5 into the expression given

h(1.5) = -15(1.5)^2 + 45(1.5) + 10

h(1.5) = -15(2.25)+67.5+10

h(1.5) = -33.75+77.5

h(1.5) = 43.75feet

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Answers

Answer:

B

Step-by-step explanation:

Written in standard form, the equation y = mx + b becomes

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The answer is C because when changing the equation Freon slope form to standard you flip the signs of the variables
The answer would be letter A

Utilize as propriedades das potências e resolva 2⁴ * 2⁷ * 2⁵​

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Answer:

65536

Step-by-step explanation:

2 elevado a 4 é 16 e 2 elevado a 7 é 128 e 2 elevado a 5 é 32, multiplique-os e você obterá 65536

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Answer:

6 m

Step-by-step explanation:

By Pythagoras Theorem:

[tex]x = \sqrt{ {10}^{2} - {8}^{2} } \\ \\ x = \sqrt{100 - 64} \\ \\ x = \sqrt{36} \\ \\ x = 6 \: m[/tex]

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Answer:

1st one is correct ....................

Answer:

x = 8, y = 12

Step-by-step explanation:

Since the triangles are congruent, we know that the parallel sides are equal to each other.

So,

4x - 7 = 3x + 1

4x - 3x = 1 + 7

x = 8

x + y = 20

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y = 20 - 8

y = 12

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1mL = 0.001 L
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a living room is 20 feet long, 50 feet wide and 12 feet high. how much paint do you need to cover the walls?
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b. 3680ft ^2
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Answers

Answer:

d

Step-by-step explanation:

Nicole washed 4/10 of a bag of potatoes.She left the rest in a basket outside what amount of potatoes did Nicole leave outside?

Answers

Answer:

6/10 Simplified: 3/5 of a bag

Step-by-step explanation:

One bag= 10/10

She washed 4/10

So, 10/10-4/10=6/10

6/10=3/5

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Stay safe and have a wonderful day/night!!!!!

Please consider rating and giving thanks, if this helped you!

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Answer:

Yes!

Step-by-step explanation:

The y = -17

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-17 does equal 18 - 35

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Answers

Answer:

m = - 2, c = 3

Step-by-step explanation:

The equation of a line in slope- intercept form is

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Given

y + 2x = 3 ( subtract 2x from both sides )

y = - 2x + 3 ← in slope- intercept form

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In triangle ABC, angle C is a right angle. Find the value of the trig function.
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Answers

Answer:

its a

Step-by-step explanation:

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