Compute what is its cost of common equity, Operation Management

Assignment Help:

The earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow at 8% per year in the future. Carpetto's common stock sells for $27.75 per share, its last dividend was $1.50, and it will pay a dividend of $1.62 at the end of the current year.

a. Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places.
_____%

b. If the firm's beta is 0.60, 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? Round your answer to two decimal places.
____ %

c. If the firm's bonds earn a return of 11%, what will rs be based on the bond-yield-plus-risk-premium approach, using the midpoint of the risk premium range as suggested in studies? Round your answer to two decimal places.
____ %

d. Assuming you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal places
____%


Related Discussions:- Compute what is its cost of common equity

Explain how to expand company, How to expand company, drive growth, and not...

How to expand company, drive growth, and not sacrifice margins?

Depict a project network that includes all the activities, Operations and S...

Operations and Supply Chain Management : CELL PHONE DESIGN PROJECT 1. Draw a project network that includes all the activities 2. Calculate the start and finish times for each

Explain major strategic operational competitive dimension, Which of the fol...

Which of the following is not a major strategic operational competitive dimension that forms a company's competitive position?

Compute the minimum replenishment time to build model, Calculate the minimu...

Calculate the minimum replenishment time to build 2500 Model A fountains given the following beginning inventories?

Explain hides the information from the other side, Research suggests that a...

Research suggests that a party with an attractive BATNA will likely receive a more positive outcome if it hides the information from the other side.

How to prove inadequate for governing the new nation, Why did the Articles ...

Why did the Articles of Confederation prove inadequate for governing the new nation? (Think about: national unity under the Articles; lack of an executive branch; economic issues

Talent planning in operation, Talent Planning in Operation 1. Produce ...

Talent Planning in Operation 1. Produce a report on the topic Talent Planning in Operation. Please ensure that you address the following issues: Describe at le

Different approaches to innovation discussed organizations, Analyze the dif...

Analyze the different approaches to innovation discussed in this chapter to determine which approach you think would be the greatest value to the greatest number of organizations.

Explain socially responsible company, In light of these actions, can GM sti...

In light of these actions, can GM still be a socially responsible company? If so, how?

Describe concentrate on one source of competitive advantage, Do you think i...

Do you think it is better to concentrate on one source of competitive advantage (cost versus differentiation versus speed) or to nurture all three in a firm's operation?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd