Provide different estimates

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ATT currently sells for $140.90 per share with a beta of 1.25. The market risk premium is approximately 4.72% and the risk-free rate is 0.07%. AAPL just paid its annual dividend of $0.85 per share. Assume that their annual dividend will grow at a rate of 6.7% in perpetuity.

Its cost of equity could be estimated using either the capital asset pricing model or the dividend discount model - constant growth, the two models provide different estimates. analysts suggest that the average of the estimates from these two models is an improved estimate. Calculate that average.

Reference no: EM133069577

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