Ginger Industries stock has a beta of 1.27. The company just paid a dividend of $.77, and the dividends are expected to grow at 5.2percent. The expected return on the market is 11.7 percent, and Treasury bills are yielding 5.2 percent. The most recent stock price is$81.50.a. Calculate the cost of equity using the dividend growth model method.Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.b. Calculate the cost of equity using the SML method.Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.a. Cost of equityb. Cost of equity%%

Step 1: Given Value for Calculation Beta = b = 1.27Current Dividend = d0 = $0.77Growth Rate = g =…

Answered: Ginger Industries stock has a beta of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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