Normal America, Inc. (NA), has paid a year-end dividend every year for the past 10 years, as
Question:
Normal America, Inc. (NA), has paid a year-end dividend every year for the past 10 years, as shown in the table below:
Anne | Share price as of December 31. | Dividend of December 15. per share | SP500 performance |
|---|---|---|---|
2010 | 33.00 | ||
2011 | 30.69 | 2.50 | 4.7% |
2012 | 35.38 | 2.50 | 16.2% |
2013 | 42.25 | 3.00 | 31.4% |
2014 | 34.38 | 3.00 | -3.3% |
2015 | 36.25 | 1.60 | 30.2% |
2016 | 32.25 | 1.40 | 7.4% |
2017 | 43.00 | 0.80 | 9.9% |
2018 | 42.13 | 0.80 | 1.2% |
2019 | 52.88 | 1.10 | 37.4% |
2020 | 55.75 | 1.60 | 22.9% |
has. Calculate the beta of NA relative to SP500.
b. Suppose that the interest rate on Treasury bills is 5.5% and that the expected return on the market is E ( rm ) = 13%. If the corporate tax rate is Tc = 3%, calculate NA's cost of equity using the CAPM model.
vs. Let's assume that NA's debt cost is 8%. If the company is financed with one-third equity and two-thirds debt, what is its weighted average cost of capital using the CAPM model?
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