Cost of equity based on the dividend growth model

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Reference no: EM132057364

1.To estimate the cost of capital, you have been provided with the following data: rRF = 5.00%; the market return is 8.00%; and Beta = 1.5. Based on the CAPM approach, what is the cost of equity?

a) 5.0%

b) 9.5%

c) 10.5%

d) 13.0%

2. Assume that you have been provided with the following data: D1 = $1.30; P0 = $32.50; and g = 5.0% (constant). What is the cost of equity based on the Dividend Growth Model?

a) 8.06%

b) 10.06%

c) 9.00%

d) 12.0%

Reference no: EM132057364

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