Ginger Industries stock has a beta of 1.08. The company just paid a dividend of $.85, and
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Ginger Industries stock has a beta of 1.08. The company just paid a dividend of $.85, and the dividends are expected to grow at 4 percent. The expected return on the market is 11.3 percent, and Treasury bills are yielding 3.4 percent. The most recent stock price for the company is $72.
a. Calculate the cost of equity using the DCF method.
b. Calculate the cost of equity using the SML method.
c. Why do you think your estimates in parts (a) and (b) are so different?
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a Cost of Equity using the DC F Method 0 85 1 04 72 76 62 b Cost of Equity using the S ML Me...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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