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Calculate the cost of equity using the capm

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Reference no: EM132967672

Problem - Cost of Equity - Western Industries' (not a real company) stock has a beta of 0.80.  The company just paid a dividend of $2.20, and the dividends are expected to grow at 3.0% per year.  The expected return on the stock market is 10.00% percent, and 3-month Treasury bills are yielding 10 basis points.  High Yield Bonds are yielding 5.50%. The most recent stock price for the company is $50.00. Calculate the cost of equity using the CAPM (capital asset pricing model) method.

Reference no: EM132967672

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