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 statement is true with respect to job satisfaction, Which of the fo...

Which of the following statement is true with respect to job satisfaction and performance/ a. reward do not cause job satisfaction/ b. job satisfaction does not cause performance/

Explain corporate social responsibility, For this project component, you ge...

For this project component, you generally assess the impact of corporate social responsibility policy on the workplace and corporate America. To complete this assignment: • A

Explain how many machines should be purchased, Up, up, and away is a produc...

Up, up, and away is a producer of kites and wind socks. Relevant data on a bottleneck operation in the shop for the upcoming fiscal year are given in the following table: Item Kite

Explain partial health care benefits would be a good idea, Do you think tha...

Do you think that offering part-time employees partial health care benefits would be a good idea?

Define state licensure requirements that an organization use, Discuss state...

Discuss state licensure requirements that an organization must comply with in order to become a Medicare Advantage Plan, any exceptions to the State licensure requirement, and any

Explain all four geographic markets during years, The market for branded at...

The market for branded athletic footwear is projected to grow a 7-9% annually worldwide during the Year 11-Year 20 period. b 9-11% annually in Latin America and the Asia-Paci

Explain why are uniform laws like the ucita necessary, Why are uniform laws...

Why are uniform laws like the UCITA and the UETA necessary? Does it make any difference if these uniform laws are not enacted in every state? How should the law be applied to a dis

Explain wastewater treatment plant, Visit the site: Wheaton, IL Sanitary Di...

Visit the site: Wheaton, IL Sanitary District. This tour of a wastewater treatment plant is an example of a high-volume, public project. • How is capacity defined at a wastewate

Explain what are the advantages of adopting this technology, An accounts re...

An accounts receivable manager processes 200 checks per day with an average process time of 15 working days. What is the average number of accounts receivable checks being processe

Calculate mape for each data set, DO different forecasting techniques (F1 a...

DO different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled water. Actual demand and the two sets of forecasts are as follows: PREDICTED DEMAN

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