Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 5 percent, and T-bills are currently yielding 4.2 percent. The company's most recent dividend was $1.40 per share, and dividends are expected to grow at an annual rate of 5 percent indefinitely. If the stock sells for $30 per share, what is your best estimate of the company's cost of equity?

Answers

Answer 1

Answer:

The best estimate of the company's cost of equity is 10.05%.

Step-by-step explanation:

Using growth rate model formula, the cost of equity can be calculated as follows:

Cost of equity as per growth rate model = (D1 / P) + g ................ (1)

D1 = Most recent dividend * (1 + g) = $1.40 * (1 + 0.05) = $1.47

P = Current price per share = $30

g = Growth rate of dividend = 5%, or 0.05

Substituting the values into equation (1), we have:

Cost of equity as per growth rate model = ($1.47 / $30 ) + 0.05

Cost of equity as per growth rate model = 0.099. or 9.90%

Using Capital Asset Pricing Model (CAPM) formula, the cost of equity can be calculated as follows:

Cost of equity as per CAPM = Risk free rate + (Beta * Market risk premium) = 4.2 + (1.2 * 5) = 10.20%

Therefore, we have:

Best estimate of Cost of equity = (Cost of equity as per growth rate model + Cost of equity as per CAPM) / 2 = (9.90% + 10.20%) / 2 = 10.05%

Therefore, the best estimate of the company's cost of equity is 10.05%.


Related Questions

A scientist has two solutions, which she has labeled Solution A and Solution Each contains salt. She knows that Solution A is 40% salt and Solution B is 55% salt. She wants to obtain 90 ounces of a mixture that is 45% salt. How many ounces of each solution should she use?

Answers

Answer:

Step-by-step explanation:

Let the number of ounces of

A = x

B = y

A scientist has two solutions, which she has labeled Solution A and Solution Each contains salt. She knows that Solution A is 40% salt and Solution B is 55% salt. She wants to obtain 90 ounces of a mixture that is 45% salt. How many ounces of each solution should she use?

Our system of equations is given as

x + y = 90.... Equation 1

x = 90 - y

40% × x + 55% × y = 45% × 90 ounces

0.4x + 0.55y = 40.5....Equation 2

We substitute 90 - y for x in Equation 2

what is s
7
+ 46
= 49

Answers

Answer:

s 7 + 46  = 49 is s  =  7 √ 3 or s  =  1.16993081 …

Step-by-step explanation:

Exact Form:

s  =  7 √ 3

Decimal Form:

s  =  1.16993081 …

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YESTERDAY PLSSSS SOMEONE URGENT!!!!!!!!!!!!!!!plssssssssssssssss

Answers

  Answer:

C

Step-by-step explanation:

WILL GIVE BRAINLIEST!
Given that ℓ1∥ℓ2 and the measure of ∠c = 44°, find the measures of angles a and b.
m∠a =
°
m∠b =
°

Answers

Answer:

<a = 44 degrees

<b = 136degrees

Step-by-step explanation:

From the given diagram;

<a = <c (alternate interior angle)

Since <c = 44 degrees, hence <a = 44 degrees

Also the sum of a and b is supplementary hence;

a + b = 180

44 + b = 180

b = 180 - 44

b = 136degrees

Hence m<b =136degrees

UGHH HELP ME PLSSS FOR EXTRA POINTS AND BRAINLEST

Answers

Answer:

4410

Step-by-step explanation:

:)

im pretty sure its B. 4,410 !

Can someone help me please

Answers

Answer:

A. Point T

Step-by-step explanation:

Answer:

A- T (-4.5, 3)

Step-by-step explanation:

A- T (-4.5, 3)

explain rounding up numbers i dont mean only examples but definitions too

Answers

Answer:

Rounding up numbers means to make a number with many numerical values or digits into a more simpler way.

Step-by-step explanation:

In order to round up a number you have to look to the digit next to it and if its greater then five it rounds up, if it's less then five it stays the same. If the number only has one digit then you have to look at that number and round up by seeing if its greater than or less than five.

Examples:

[tex]7[/tex]

[tex]7>5[/tex]

[tex]7=10[/tex]

7 rounded up equals 10 because 7 is more near 10 then it is to one.

Round the number 12,371 to the nearest thousand.

This means to find the thousands place value (two) check the number next to the thousands place value (hundreds or three) and check to see if that number is greater then five or not.

[tex]12,371[/tex]

[tex]3 <5[/tex]

[tex]=12,000[/tex]

Therefore the 12,371 rounded to the nearest thousand is "twelve-thousand" and that's because three is not greater then or equal to five.

Hope this helps.

Which ordered pairs are solutions to the system of linear equations?
y = 2x + 1
2y - 4x = 2
O (0,1)
O (1,0)
O (2,3)
O (-1, - 1).
0 (0,0)
O (-1,3)

Answers

Answer:

answer is (0,1).........

Can yall help me with this
WILL GIVE BRAINLIEST

Answers

19 guests because each guest is $2 each according to the question.

Answer:

19 guests

Step-by-step explanation:

26 dollars = 13 guests

26/13 = 2

2*19 = 38

Final Answer: 19 guests

Hope this helps. :)

I RLLLLYYY NEED HELP ASAP ILL GI S BRAINLIEST

mr. torres ordering 250 School t-shirts to sell in a school store the t-shirts come in blue gray or red to know how many of each color to order mr. torres polled a random sample of students l.the results are in the table​

Answers

Answer:17

Step-by-step explanation:

so i think it would be 17 as 5 is equivlent  to 8.33 percent of 60 which is the total amount of kids and 8.33 percent of 250 is 20 but since i think ur school rounds that percentage it would 17 red shirts

The results are in the table​ of the 250 total T-shirts about should be red 17.

We have given that,

Mr. torres ordered 250 School t-shirts to sell in a school store the t-shirts come in blue-gray or red to know how many of each color to order Mr. Torres polled a random sample of students. the results are in the table​.

What is the random sample?

A simple random sample is a subset of a statistical population in which each member of the subset has an equal probability of being chosen.

So I think it would be 17 as 5 is equivalent to 8.33 percent of 60 which is the total amount of kids and 8.33 percent of 250 is 20 but since I think your school grounds that percentage it would be 17 red shirts.

To learn more about the probability visit:

https://brainly.com/question/25870256

#SPJ2

The area of a rectangular dance floor is 8 1/4
square yards, and its width is 3 1/2 yards. What is the patio's length in yards
A 54
B 2
C 4:
D 5

Answers

Answer:

2 5/14 yards

Step-by-step explanation:

Area of the rectangular floor = Length * Width

Given

Area = 8 1/4 square yards

width = 3

1/2 yards

Required

Length

Length = Area/width

Length = (8 1/4)/(3 1/2)

Length = 33/4 ÷ 7/2

Length = 33/4 * 2/7

Length = 33/14

length = 2 5/14 yards

This gives the required length

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There are 3 times as many students participating in the hiking trip this year than last year. There are 42 students on the trip this year.

1.Write an equation that represents the number of students that came on the hiking trip last year

2.How many students attended the hiking trip last year?

Answers

Answer:

1.  42/x

2.  14 students

Step-by-step explanation:

1.  42 divided by x

    x=students on trip last year

2. 42 divided by 3

    42/3=14 students this year

 

PLZ HELP RN ILL MARK YOU BRAINLIST IF ITS RIGHT PLZZZ IM DESPERATE

Answers

Answer:

x = 24

Step-by-step explanation:

What I would do is use inverse operation. First do -8 x -3 = 24. Then check your work by doing 24 divided by -3 = -8. So x = 24. I am 100% sure this is correct

Pls mark me brainliest

i dont know how to do this, please help​

Answers

Answer:  B= 11

Step-by-step explanation:

A pentagon with an apothem 316.6 millimeters long and a side 460 millimeters long. Find the perimeter and area

Answers

How to find can u send the pic of this question

Can someone help?

Solve the following equation for all values of x. Be sure to check for extraneous roots.

Answers

Answer:

[tex]x=2[/tex]

Step-by-step explanation:

First, let's multiply both sides by [tex]\sqrt{x+11}[/tex]. If we do this, we would have:

[tex]x-1=\frac{1}{\sqrt{x+11}}\cdot\sqrt{x+11}[/tex]

The [tex]\sqrt{x+11}[/tex] would cancel out and we would be left with:

[tex]x-1=1[/tex]

If we add 1 on both sides, we would get:

[tex]x=2[/tex]

Hope this helps!!!

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Answers

Answer:

Its 268.08 hope this helps

Step-by-step explanation:

The correct answer and volume to this is 268.08 CM

Can you help? I'll give brainliest

Answers

Answer:

w=2 3/4

Step-by-step explanation:

Where is the function increasing? A) 1 < x < ∞ B) 3 < x < ∞ C) -∞ < x < 1 D) -∞ < x < 3
please hurry i have 5mins

Answers

Answer: I think its A

Step-by-step explanation:

The given function is  increasing from 1 to ∞. Therefore, option A is the correct answer.

What is the function?

Functions are the fundamental part of the calculus in mathematics. The functions are the special types of relations. A function in math is visualized as a rule, which gives a unique output for every input x.

From the given graph, the vertex is (1, -2)

For a function y = f(x), if the value of y increases on increasing the value of x, then the function is an increasing function.

Here, the function is increasing from 1 to infinity.

Therefore, option A is the correct answer.

To learn more about the function visit:

https://brainly.com/question/28303908.

#SPJ3

the sum of three consecutive odd numbes is 57 what are the three numbers​

Answers

Answer: 17, 19, and 21

I think these are correct, hope it helps!

How to find the height of a cone when only radius is given

Answers

Answer:

upload the actually picture of the math problem young lady

Find the distance between the pair of points. ​(4​,1) and ​(9​,6​)

Answers

Answer:

5√2 or 7.07 units

Step-by-step explanation:

To find the distance between two points, we want to use the distance formula: d = √[(x₂ - x₁)² + (y₂ - y₁)²]

Plug in the given values of (4​,1) and ​(9​,6​)

d = √[(x₂ - x₁)² + (y₂ - y₁)²]

d = √[(9 - 4)² + (6 - 1)²]

Simplify the parentheses.

d = √[(5)² + (5)²]

Simplify the exponents.

d = √[25 + 25]

Add.

d = √[50]

Evaluate the radical.

5√2 or 7.07

Round the decimal.

5√2 or 7.07 units

Hope this helps!

The graph of an equation is shown below:

Answers

Answer:

D, or (-3,2)

Step-by-step explanation:

Because the point (-3,2) is on the line of the equation shown, it is a solution. You can also notice that none of the other options are on the line and use the process of elimination.

Which equation best represents the axis of symmetry?
A y = 6
B X = 2
C y = 4
D x = 0

Answers

The axis of symmetry is A)y=6

What is the proportion for x

Answers

12x15=18(3x+4)
180=54x+72
-72 -72
108=54x
/54 /54
2=x

X=2 the other person is a d0uche for answering like that so I answered instead of them

How many cubic meters of material are there in conical pile of dirt that has radius 9 meters and height 6 meters?Use 3.14 for pi

Answers

Answer:

V = 226.08 m³

Step-by-step explanation:

The formula for the volume of a cone of base radius r and height h is

V = (1/3)(πr²)(h).

In this case, r = 6 m and h = 6 m.  Thus, the volume of this conical pile is

V = (1/3)(3.14)(6 m)²(6 m), or

V = 226.08 m³

Find x and y.

x = 18, y = 9
x = 4, y = 9
x = 4, y= 27
x = 9, y = 24

Answers

Answer:

the answer is c hope is helps

A. 118 degrees
B. 180 degrees
C. 64 degrees
D. 62 degrees

Will you brainliest for the correct answer!!!
Please help!!

Answers

Answer:

62 degrees

Step-by-step explanation:

you need to understand the def.ang.biscectors, it is going to mean if a life bisects another line, the two angles on one side will add up to 180

therefore

180-118=62

Which function does the graph represent?
3, 15)
Of(x) = (x + 3)(x + 7)
O f(x) = (x - 3)(x - 7)
O f(x) = 3(x – 3)(x – 7)
Of(x) = 11(x + 3)(x + 7)

Answers

Answer:      imgurl=http%3A%2F%2Fwww.rasmus.is%2FIS%2FT%2FF%2FSu52k03_m01.gif&imgrefurl=http%3A%2F%2Fwww.rasmus.is%2Fuk%2Ft%2FF%2FSu52k03.htm&tbnid=0mYNOM8hE-8CkM&vet=12ahUKEwj4y9mb3NrvAhXNtFMKHZ9kCDEQMygIegUIARCjAQ..i&docid=Iv4G7-Ojzx0JrM&w=290&h=247&q=Which%20function%20does%20the%20graph%20represent%3F3%2C%2015)Of(x)%20%3D%20(x%20%2B%203)(x%20%2B%207)O%20f(x)%20%3D%20(x%20-%203)(x%20-%207)O%20f(x)%20%3D%203(x%20%E2%80%93%203)(x%20%E2%80%93%207)Of(x)%20%3D%2011(x%20%2B%203)(x%20%2B%207)&safe=active&ved=2ahUKEwj4y9mb3NrvAhXNtFMKHZ9kCDEQMygIegUIARCjAQ

7/15=x/45 find the missing value

Answers

Answer:

the answer to your question is 21

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