Assume the following information about Johnson & Johnson (ticker: JNJ). JNJs equity beta is 0.55. The yield
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Assume the following information about Johnson & Johnson (ticker: JNJ). JNJ’s equity beta is 0.55. The yield on 10-year treasuries is 3%, and you estimate the market risk premium to be 6%. Furthermore, Johnson & Johnson issues dividends at an annual rate of $2.81. Its current stock price is $92.00, and you expect dividends to increase at a constant rate of 4% per year. Estimate J&J’s cost of equity in two ways.
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Fundamentals Of Corporate Finance
ISBN: 9781292437156
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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