You have assigned the following values to these three firms: Upcoming Dividend $3.15 1.18 1.00 US Bancorp Praxair Eastman Kodak 7 Price $115.50 57.10 27.45 US Bancorp required return Praxair required return Eastman Kodak required return CAPM Growth 9.00% Assume that the market portfolio will earn 12.70 percent and the risk-free rate is 3.40 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) % % % 14.50 9.20 Beta 1.42 2.14 1.84 Constant-Growth Model % % %

You have assigned the following values to these three firms: Upcoming Dividend $3.15 1.18 1.00 US Bancorp Praxair Eastman Kodak 7 Price $115.50 57.10 27.45 US Bancorp required return Praxair required return Eastman Kodak required return CAPM Growth 9.00% Assume that the market portfolio will earn 12.70 percent and the risk-free rate is 3.40 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) % % % 14.50 9.20 Beta 1.42 2.14 1.84 Constant-Growth Model % % %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 26P

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