Calculate cost of equity using the dividend growth model

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Reference no: EM131567413

Pierce Industries stock has a beta of 1.36. The company just paid a dividend of $.86, and the dividends are expected to grow at 5.1 percent. The expected return on the market is 11.6 percent, and Treasury bills are yielding 5.1 percent. The most recent stock price is $83.75.

a. Calculate the cost of equity using the dividend growth model method.

Cost of equity %

b. Calculate the cost of equity using the SML method.

Cost of equity %

Reference no: EM131567413

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