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 value differences among national cultures, What are some managerial...

What are some managerial styles you would employ in managing an emloyee who is considered baby boomer List and explain hofstedes five dimensions of value differences among natio

Explain important part of strategic training, Why is evaluating training an...

Why is evaluating training an important part of strategic training?

Describe the significance of the estonia article, Answer the following ques...

Answer the following questions on the Topic of The History of the American Corporation 1-Describe what is the rule of law and its importance on a successful capitalistic society

Logistics, Ask question #Minimum 100 words acceptedTopic 2: Logistics Logi...

Ask question #Minimum 100 words acceptedTopic 2: Logistics Logistics is the management of the flow of goods, information and other resources, including energy and people, between

Explain the objectives of work study for any management, Explain the object...

Explain the objectives of work study for any management. The objectives of work study for any management are:- a) Enhanced working processes and standard procedures. b) L

Explain student aid and scholarships office, You have just been notified by...

You have just been notified by the Student Aid and Scholarships Office that you would receive a regents scholarship of $2000 for the coming academic year. Furthermore, your applica

Explain information and communication technologies, 1. One consequence of g...

1. One consequence of globalization is increased competition. 2. Due to globalization, organizations often locate parts of their operations in different countries. 3. Due to global

Explain why businesses set plans, 1) Discuss why businesses set plans, how ...

1) Discuss why businesses set plans, how they set plans, and how short and long-term objectives work together. 2) Define and discuss the role of a company's vision and mission in

How performing the necessary paperwork, Annual demand for number 2 pencils ...

Annual demand for number 2 pencils at the campus store is normally distributed with mean 1,000 and standard deviation 250. The store purchases the pencils for 6 cents each and sell

Find annual carrying costs, Garden Variety Flower Shop uses 740 clay pots a...

Garden Variety Flower Shop uses 740 clay pots a month. The pots are purchased at $2 each. Annual carrying costs per pot are estimated to be 30 percent of cost, and ordering costs a

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