What is the company cost of equity

Assignment Help Financial Management

Reference no: EM131350570

The Absolute Zero Co. just issued a dividend of $3.05 per share on its common stock. The company is expected to maintain a constant 6.3 percent growth rate in its dividends indefinitely.

If the stock sells for $61 a share, what is the company’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of equity %

Reference no: EM131350570

Questions Cloud

What will be an investor taxable income from the bond : A newly issued 10-year maturity, 4% coupon bond making annual coupon payments is sold to the public at a price of $780. The bond will not be sold at the end of the year. The bond is treated as an original-issue discount bond. Calculate the constant y..

Using put-call parity and a call premium : Using put-call parity and a call premium of $13.70, please find the value of the put option on the stock given with a strike price of ($95) and a time to expiration of (3-month).

More relevant the pretax or the aftertax cost of debt : Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 10 percent 2 years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt? Wh..

Calculate the firm operating cycle and cash conversion cycle : Camp Manufacturing turns over its inventory five times each year, has an average payment period of 35 days and has an average collection period of 60 days. The firm has annual sales of $3.5 million and cost of goods sold of $2.4 million. Calculate th..

What is the company cost of equity : The Absolute Zero Co. just issued a dividend of $3.05 per share on its common stock. The company is expected to maintain a constant 6.3 percent growth rate in its dividends indefinitely. If the stock sells for $61 a share, what is the company’s cost ..

Expiration date payoffs to this position for stock prices : You simultaneously write a put and buy a call, both with strike prices of $70, naked, i.e., without any position in the underlying stock. What are the expiration date payoffs to this position for stock prices of $60, $65, $70, $75, and $80?

Expiration date profits to this position for stock prices : You buy a call with a strike price of $70 on stock that you have shorted at $70 (this is a ‘protective call’). What are the expiration date profits to this position for stock prices of $60, $65, $70, $75, and $80 if the call premium is $4?

Evaluate potential gains and losses at option expiration : Suppose you write 20 call option contracts with a $40 strike. The premium is $2.50. Evaluate your potential gains and losses at option expiration for stock prices of $30, $40, and $50.

What must expected return on this stock be : A stock has a beta of 1.24, the expected return on the market is 10 percent, and the risk-free rate is 4.5 percent. What must the expected return on this stock be?

User Account

All Pages