Longing Toys Inc. has just paid an annual dividend of $0.52 per
share. Analysts expect the firm's dividends to grow by 4% forever.
Its stock price is $35.6 and its beta is 0.5. The risk-free rate is
3% and the expected return on the market portfolio is 10%. Its
bonds have a yield to maturity of 8%, and the risk-premium of
Longing's stock over its bonds is 5%.
What is the cost of equity from retained earnings according to
the DCF approach?
What is the cost of equity from retained earnings according to
the CAPM?
What is the cost of equity from retained earnings according to
the bond yield plus risk premium approach?
What is your best guess for the cost of equity from retained
earnings , using the midpoint of the range?
Longing Toys Inc. has just paid an annual dividend of $0.52 per share. Analysts expect the firm's dividends to grow by 4
-
- Site Admin
- Posts: 899603
- Joined: Mon Aug 02, 2021 8:13 am