Question: You have assigned the following values to these three firms: Price Upcoming Dividend Growth Beta US Bancorp $ 36.55 $ 1.60 10.00 % 1.80 Praxair

You have assigned the following values to these three firms:

Price Upcoming Dividend Growth Beta
US Bancorp $ 36.55 $ 1.60 10.00 % 1.80
Praxair 64.75 1.12 11.00 2.40
Eastman Kodak 24.95 1.00 4.50 0.50

Assume that the market portfolio will earn 12.00 percent and the risk-free rate is 3.50 percent.

Compute the required return for each company using both CAPM and the constant-growth model.(Do not round intermediate calculations. Round your final answer to 2 decimal places.)

CAPM Constant-growth model
US Bancorp required return % %
Praxair required return % %
Eastman Kodak required return %

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!