Calculate the cost of equity using the SML method

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Reference no: EM133629935

Question

Ginger 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 4.8 percent. The most recent stock price for the company is $65.

a. Calculate the cost of equity using the DGM method.

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

Reference no: EM133629935

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