The latest annual dividend paid by EPSILON was 4 per share and is expected to both
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Question:
The latest annual dividend paid by EPSILON was 4 € per share and is expected to both the benefits and dividends grow at a steady rate of 8%. The selling price of the stock today is 50 € per share. The un levered company's beta is 1.5, the return of the market portfolio is 12% and the risk-free rate is 8%. The bonds of this company have an A rating, which means a risk premium of 4%. Calculate the cost of capital of the company using:
a) The Gordon model.
b) Modigliani and Miller.
c) The Capital Asset Pricing Model.
Related Book For
Essentials of Statistics for Business and Economics
ISBN: 978-1305081598
7th edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam
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