What is this firms cost of equity using the capm

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Reference no: EM132491003

Suppose you are an analyst with the following data:

rRF = 5.5%

rM - rRF = 6%

b=0.8

D1 = $1.00

P0 = $25.00

g = 6%

firm's bond yield = 6.5%

Please answer the following:

Question 1. What is this firm's cost of equity using the CAPM?

Question 2. What is this firm's cost of equity using the DCF?

Question 3. What is this firm's cost of equity using the bond-yield-plus-risk-premium approach? Use the midrange of the judgmental risk premium for the bond-yield-plus-risk-premium approach.

Reference no: EM132491003

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