The dividend of Ono is currently R2 per share, and it is expected to grow at...

 

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The dividend of Ono is currently R2 per share, and it is expected to grow at 5 percent a year forever. Its share price is R50. Its beta is 1.08. The market risk premium is 5 percent, and the risk-free rate is 4 percent. What is your best estimate of Ono's equity? (5) When we say that a company, a division, or a project has a cost of equity capital of 10 percent and a cost of debt of 8 percent, what do we mean? Why is the cost of debt lower than the cost of equity? (5) The dividend of Ono is currently R2 per share, and it is expected to grow at 5 percent a year forever. Its share price is R50. Its beta is 1.08. The market risk premium is 5 percent, and the risk-free rate is 4 percent. What is your best estimate of Ono's equity? (5) When we say that a company, a division, or a project has a cost of equity capital of 10 percent and a cost of debt of 8 percent, what do we mean? Why is the cost of debt lower than the cost of equity? (5)

Answer rating: 100% (QA)

1 Best Estimate of Onos Equity To estimate Onos cost of equity we can use the Capital Asset Pricing Model CAPM which relates the cost of equity to the ... View the full answer