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Calculate the cost of equity using the DCF method

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Reference no: EM131799097

Question - Floyd Industries stock has a beta of 1.80. The company just paid a dividend of $0.65, and the dividends are expected to grow at 7 percent. The expected return of the market is 15 percent, and Treasury bills are yielding 5 percent. The most recent stock price for Floyd is $52. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

Required:

(a) Calculate the cost of equity using the DCF method.

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

Reference no: EM131799097

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