Firm cost of common equity using the capm approach

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Reference no: EM132007822

Cost of Common Equity (Using CAPM) The future earnings, dividends, and common stock price of Callahan Technologies Inc, are expected to grow 6% per year. Callahan's common stock currently sells for $22.00 per share; its last divident was $2.00; and it will pay a $2.12 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? The answer is 15.6% b. If the firm's beta is 1.2, the risk-free rate is 6%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach?

Reference no: EM132007822

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