Homework Answers
Beta of Harry's = (1.0)(0.09)/0.09 = 1
So,
Using CAPM Model,
Expected Return of Harry's = 0.05 + 1(0.12 - 0.05) = 0.12
Using Constant Growth Model,
Stock Price = 0.90(1.11)/(0.12 - 0.11)
Stock Price = $99.90
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1 - COLLEGE 7. The common stock of Harry's just paid O Harry's just paid a...
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please do number 6 and 7 i have no idea how to do them!
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please do number 6 and 7 i have no idea how to do them!
0.2 13% 0.1 15% a. What is the fund's beta? b. What is the market risk premium? c. What is the fund's required rate of return? The fund is considering an additional $50 million investment in a new stock with a beta of 2.0. What is the expected rate of return on this new stock? port. Bela 6. Pacific Desert Corp is considering a large investment...
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A company just paid a $2.8 per share dividend on its common stock (DO = $2.8). The dividend is expected to grow at a constant rate of 4.9 percent per year. The stock currently sells for $40 a share. If the company issues additional stock, it must pay its investment banker a flotation cost of $1 per share. What is the cost of external equity, re? 12.43% 11.63% 12.03% 11.83% 12.23%
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