Question: Will leave a like! Thanks! The future eamings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's
The future eamings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $30.00 per share; its tast dividend was $2.00; and it will pay a $2.16 dividend at the end of the current year. a. Usine the DCF approsch, what is its cost of common equity? Pound your answer to two decimal places. Do not round your intermediate calculations. b. Hf the firm's beta is 1.50 , the nisk-free rate is 5%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round vour answer to two decimal ploces: c. If the furm's bonds earn a return of 11%, based on the bond-yield plus risk-premium approach, what will be ra? Use the midpoint of the risk premium range discussed in Section 105 in your calculations. Round your answer to two decimal places. d. Il you have equal conhidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common eyfury? inuiud your answer to two decimal slaces. Do not round your intermediate colculations
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