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Calculate the cost of equity using the SML method

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Reference no: EM133022824

Question - Floyd Industries stock has a beta of 1.20. The company just paid a dividend of $.50 and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 5.2 percent. The most recent stock price for the company is $69.

Required -

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

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

Reference no: EM133022824

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