EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 8, Problem 20PROB
Summary Introduction
CAPM:
Calculate the
Cost of new common stock is the cost incurred by the company for issue new common stock.
Calculate the cost of equity as follows:
HE has current price is $37.5 and Current dividend of $2. Risk free rate is 4% and beta is 1.1 and market return is 10%.
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Franklin Corporation is expected to pay a dividend of $1.24 per share at the end of the year (D1 = $1.24). The stock sells for $32.40 per share, and its required rate of return is 7.2%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
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