Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity).
Assume:
Rf | = | 4 | % | |
Km | = | 8 | % | |
β | = | 1.6 | ||
D1 | = | $ | 0.50 | |
P0 | = | $ | 18 | |
g | = | 8 | % | |
a. Compute Ki
(required rate of return on common equity based on the capital
asset pricing model). (Do not round intermediate
calculations. Input your answer as a percent rounded to 2 decimal
places.)
b. Compute Ke
(required rate of return on common equity based on the dividend
valuation model). (Do not round intermediate calculations.
Input your answer as a percent rounded to 2 decimal places.)
Rf | 4 | ||
Km | 8 | ||
Beta | 1.6 | ||
D1 | 0.5 | ||
P0 | 18 | ||
g | 8 | ||
required | |||
rate of return' | Rf+B(Km-Rf) | ||
CAPM | `=4+1.6(8-4) | ||
10.4 | |||
rate of return' | D1/P0+g | ||
Dividend model | `=0.5/18%+8% | ||
10.777 |
Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model...
Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 6 % Km = 9 % β = 1.5 D1 = $ 0.80 P0 = $ 18 g = 6 % a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round...
Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 5 % Km = 10 % β = 1.7 D1 = $ 0.40 P0 = $ 19 g = 9 % a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round...
Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 5 % Km = 10 % β = 1.7 D1 = $ 0.40 P0 = $ 19 g = 9 % a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round...
Eaton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 8 % Km = 13 % β = 1.7 D1 = $ 0.90 P0 = $ 20 g = 9 a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round intermediate calculations....
Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf ка B D1 Pe g 3% 8% 1.2 = $0.35 = $ 14 = 8% a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round intermediate calculations. Input your answer as a percent...
aton Electronic Company’s treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf = 8 % Km = 13 % β = 1.7 D1 = $ .90 P0 = $ 20 g = 9 % a. Compute Ki (required rate of return on common equity based on the capital asset pricing model). (Do not round intermediate...
Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of return for common equity). Assume: Rf Km B = 5% = 10% = 1.2 = $0.80 = $ 20 = 7% a. Compute K; (required rate of return on common equity based on the capital asset pricing model). (Do not round intermediate calculations. Input your answer as a percent...
Eaton Electronic Company's treasurer uses both the capital asset pricing model and the dividend valuation model to compute the cost of common equity (also referred to as the required rate of retum for common equity). Assume Rt 6% = % Am = $ .90 = $ 19 Po 5% a. Compute Ki (required rate of retum on common equity based on the capital asset pricing model). (Do not round intermediate calculations. Input your answer as a percent rounded to 2...
Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Risk-free rate, RF 10% Market return, om 15% Beta, b 0.5 The required return for the asset is % (Round to two decimal places.)
Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the requied returm, (Click on the icon located on the top-ight comer of the data table below in order to copy its contents into a spreadsheet.) Risk-free rate, RF 8% Market return, m 16% Beta, b The required return for the asset is (Round to two decimal places) Enter your answer in the answer box 2 12/2/2018