Question: Using 3 methods (dividend yield + growth rate, CAPM and bond yield + premium), calculate the cost of equity for Coca Cola corp. The current

Using 3 methods (dividend yield + growth rate, CAPM and bond yield + premium), calculate the cost of equity for Coca Cola corp. The current dividend (D₀) is $1.64 and dividends are expected to grow by 4.5% per year. The stock is currently selling for $54.65. The beta is .62, risk free rate is 1% and the market risk premium is 8%. Their bonds are yielding about 4.2%.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Using 3 methods (dividend yield + growth rate, CAPM and bond yield + premium), calculate the cost of equity for Walmart corp. The current dividend (D) is $2.16 and dividends are expected to grow by...

Using 3 methods (dividend yield + growth rate, CAPM and bond yield + premium), calculate the cost of equity for Colgate-Palmolive corp. The current dividend (Do) is $1.71 and dividends are expected...

1. Using 2 methods (dividend yield + growth rate and CAPM), calculate the cost of equity for 3M corp. The current dividend (D0) is $5.76 and dividends are expected to grow by 6% per year. The stock...

Please do 4 and 5 4) Assuming the companys current capital structure is its target capital structure, if Foliage Companyhas the following capital structure, what is the firms weighted average cost of...

Please double check your work 1) Foliage Companys 10 year bonds, which have a coupon of 4%, currently trade in the market at a 4.8%yield to maturity. If its marginal tax rate is 35%, what is the...

I have updated this with the appropriate Cost of Debt. Now my I would like to know if my WACC equation is correct? Data for Hilton Group (HLT) Equity: Market Cap 18.75 B *found on Yahoo Finance Debt...

WACC Current price of common stock, P 0 $ 5 0 . 0 0 Last year's dividend on common stock, D 0 $ 2 . 1 0 Growth rate of common dividend, g 7 % Flotation cost for common stock 1 2 % Current price of...

The Chief Financial Officer (CFO) of the R69F Company is interested to identify the value of this company under multiple methods, for example , discounting dividend method using cost of equity or...

The Chief Financial Officer (CFO) of the R70F Company is interested to identify the value of this company under multiple methods, for example , discounting dividend method using cost of equity or...

Please provide a page and a half paper to answer the following question: Major factors company should be aware of/evaluate regarding future investments projects. Use the attachments to answer the...

(15pts) You are interested in investing in a FinTech company. It is expected that the company will not pay any dividends in the next three years. In year 4, a dividend of $2 per share will be paid...

On January 1, 2022, Cullumber Company had a balance of $386,500 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite...

A firm's foscal year starts on March 1 , 2 0 2 6 and ends on february 2 8 , 2 0 2 7 . You are recording a sales return that occured on April 1 0 , 2 0 2 6 for a sale that took place on april 7 , 2 0...

comision paid to sales staff is considered what type of cost