Cost of equity using the dividend growth model method

Assignment Help Financial Management

Reference no: EM132005755

Laverne Industries stock has a beta of 1.15. The company just paid a dividend of $.95, and the dividends are expected to grow at 4 percent. The expected return of the market is 11.5 percent, and Treasury bills are yielding 3.8 percent. The most recent stock price is $81. Required: (a) Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity % (b) Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity %

Reference no: EM132005755

Questions Cloud

Which will occur with the external financing : How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

Assuming that the interest expense is equal to zero : Which of the following are correct methods of computing the operating cash flow of a project assuming that the interest expense is equal to zero?

Computed the npv of project using nominal values : Assume you computed the NPV of a project using nominal values. Your partner computed the NPV of the identical project using real values,

Calculate appropriate discount rate-operating cash flow : What is the annual operating cash flow, OCF, from this project? Calculate the appropriate discount rate to use when evaluating DEI’s project.

Cost of equity using the dividend growth model method : Calculate the cost of equity using the SML method. Calculate the cost of equity using the dividend growth model method.

Types of loans requires periodic repayments : Which one of the following types of loans requires periodic repayments, each of which reduces the principal balance?

Analyzing proposed expansion project : Casper's is analyzing a proposed expansion project that is much riskier than the firm's current operations.

What will the cash flows for this project be : The firm’s marginal tax rate is 35 percent. What will the cash flows for this project be?

What does waste increase costs : What does waste increase costs? Give three examples.

User Account

All Pages