Epley Restaurant Group's stock has a beta of 1.20. The company just paid a dividend of...

 

Transcribed Image Text:

Epley Restaurant Group's stock has a beta of 1.20. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent. The expected return on the market is 11 percent, and Treasury bills are yielding 5.6 percent. The most recent stock price for the company is $73. a) Calculate the cost of equity using the dividend valuation method. b) Calculate the cost of equity using the CAPM method. Epley Restaurant Group's stock has a beta of 1.20. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent. The expected return on the market is 11 percent, and Treasury bills are yielding 5.6 percent. The most recent stock price for the company is $73. a) Calculate the cost of equity using the dividend valuation method. b) Calculate the cost of equity using the CAPM method.

Answer rating: 100% (QA)

The question involves calculating the cost of equity using two different methods the Dividend Valuat... View the full answer