The below data is for an ASX listed company, Metacash. Calculate cost of equity using both...
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The below data is for an ASX listed company, Metacash. Calculate cost of equity using both CAPM and Fama French methods. Premiums: Market risk premium Size risk premium Market to book risk premium Risk Free Rate Coefficients: b S h CAPM beta 7.00% 2.55% 3.81% 4.30% 1.4450 -0.998 1.2232 1.5000 5 Marks Discuss step by step the implications of calculating Metacash cost of equity using CAPM (instead of Fama French) on company's valuation and share price. 5 Marks The below data is for an ASX listed company, Metacash. Calculate cost of equity using both CAPM and Fama French methods. Premiums: Market risk premium Size risk premium Market to book risk premium Risk Free Rate Coefficients: b S h CAPM beta 7.00% 2.55% 3.81% 4.30% 1.4450 -0.998 1.2232 1.5000 5 Marks Discuss step by step the implications of calculating Metacash cost of equity using CAPM (instead of Fama French) on company's valuation and share price. 5 Marks
Expert Answer:
Answer rating: 100% (QA)
Lets first calculate the cost of equity for Metacash using both the CAPM Capital Asset Pricing Model and the FamaFrench method Then well discuss the i... View the full answer
Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
Posted Date:
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