Calculate the cost of equity using the dcf-sml method

Assignment Help Financial Management

Reference no: EM13947316

Epley Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 4.5 percent. The most recent stock price for the company is $62.

a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

DCF method %________

b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

SML method %________

Reference no: EM13947316

Questions Cloud

Risk-free rate-market risk premium : Stock Y has a beta of 1.35 and an expected return of 15 percent. Stock Z has a beta of 0.8 and an expected return of 11.8 percent. If the risk-free rate is 5.3 percent and the market risk premium is 7.8 percent, are these stocks correctly priced?

Value of the nusselt number nud at location : For flow of a liquid metal through a circular tube, the velocity and temperature profiles at a particular axial location may be approximated as being uniform and parabolic, respectively. That is, u(r) C1 and T(r) - Ts C2[1 - (r/ro)2], where C1 ..

Explain how the purchases of goods or materials is calculate : Explain how the purchases of goods or materials is calculated if we know the cost of goods sold and the inventory (stock) at the start and end of the period.

What the business produces or sells : What the business produces or sells - who the main customers are and where most of the customers are located (e.g. in Townsville, Jakarta, or on the net);

Calculate the cost of equity using the dcf-sml method : Epley Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 4.5 percent. The most recent st..

Calculate the surface temperature of the droplet : Neglecting radiation and assuming steady-state conditions, calculate the surface temperature of the droplet if the ambient air temperature is 300 K. The latent heat of vaporization is 8.42 X 105 J/kg.

Who are the informal and formal gatekeepers in the community : Who are the informal and formal gatekeepers in the community? Provide a rationale for your answer that includes how and why you identified these gatekeepers.

What is the expected opening price of the stock : Assume the stockholders of EX stock are in the 28 percent tax bracket. The closing price of the stock today was $67.18 a share. The firm pays a quarterly dividend of $1.65 per share. What is the expected opening price of the stock tomorrow if tomorro..

What are the differences between these two standards : One recent change in web design is the shift in standards from HTML to XHTML

User Account

All Pages