Using DCF approach-what is the cost of common equity

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The Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36. New stock (external equity) can be sold to net $32.40 a share. a. Using the DCF approach, what is the cost of common equity? b. If the firm's beta is 1.6, the risk free rate is 9% and the average return on the market is 13% what will e the firm's cost of common equity using the CAPM approach? c. If the firm's bonds earn a return of 12% based on the bond yield plus risk premium approach, what will be r_s Use the midpoint of the risk premium range. d. If you have equal confidence in the inputs used for the three approaches what is your estimate of Carpetto's cost of common equity?

Reference no: EM13987885

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Using DCF approach-what is the cost of common equity : The Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36. New stock (external equity) can be sold to net $32.40 a share. Using the DCF approach, what is the cost of common equity? If you..

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