Determine the companys cost of equity capital last year

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Reference no: EM13214008

Common stocks issued by Henry Harmon Builders paid stockholders $0.93 per share on an average price of $18.80 last year. The company expects to grow the dividend rate at a maximum of 1.5% per year. The stock volatility of 1.19 is somewhat higher than that of other public firms in the construction industry, and other stocks in this market are paying an average of 4.95% per year dividend. U.S. Treasury bills are returning 4.5%. Determine the company's cost of equity capital last year, using (a) the dividend method and (b) the CAPM.

Reference no: EM13214008

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