Best estimate of the company cost of equity

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Reference no: EM131976322

1. Stock in Country Road Industries has a beta of 0.76. The market risk premium is 9 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.6 per share, and dividends are expected to grow at a 5.5 percent annual rate indefinitely. If the stock sells for $35 per share, what is your best estimate of the company's cost of equity.

9.32%

10.83%

7.92%

11.34%

10.32%

2. If you receive a stated annual interest rate of 24 percent compounded quarterly what is your year end wealth on an investment of $1.00? Co x (1 + r/m)^m

A 1.2625

B 1.2400

C 1.0134

Reference no: EM131976322

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