Calculate the cost of equity for both companies

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Reference no: EM132275831

Using WRDS, download the following items from CRSP-Stock/Security Files-Monthly Stock File for Microsoft Corporation and Johnson & Johnson for the past 10 years ending December 31, 2016: Please solve in excel and show all formulas and work

Company Name

Ticker

Monthly stock price

Monthly Holding Period Return

Dividends

Using the Gordon Dividend Model, calculate the cost of equity for both companies. Use dividend data from the past 10 years when estimating the constant growth rate for future dividends. Be sure to explain any adjustments that you make to your constant growth rate estimates due to abnormal dividend behavior over the past 10 years (one time dividends, irregular dividends, etc…). Note: This is not a supernormal growth dividend model situation.

Reference no: EM132275831

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