Question: can i have the answer for c) and d) ? The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4%
can i have the answer for c) and d) ?
The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 4% per year in the future. Shelby's common stock sells for $25.00 per share, its last dividend was $2.00, and the compan will pay a dividend of $2.08 at the end of the current year. a. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % b. If the firm's beta is 1.0, the risk-free rate is 3%, and the expected return on the market is 13%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. % c. If the firm's bonds earn a return of 10%, then what would be your estimate of rs using the ownbond-yield-plus-judgmental-risk-premium approach? (Hint: Use the mid-point of the risk premium range.) Round your answer to two decimal places. % d. On the basis of the results of parts a-c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally. Round your answer to two decimal places. %
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