Using the Yahoo! Finance Web site (finance.yahoo.com) get the current price and five-year dividend history for PPG
Question:
a. Calculate the annualized dividend growth rate from the five-year dividend history using the same procedure as in Chapter 8.
b. Using the stock's current price, dividends, and growth rate, calculate the cost of retained earnings for PPG.
c. Assuming that the average market return over the next five years will be 8%, calculate the cost of retained earnings using the CAPM. Use the actual beta and five-year Treasury yield (risk-free rate) in the model.
d. To get your final estimate of the cost of retained earnings, simply average the results from parts b and c.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Financial Analysis with Microsoft Excel
ISBN: 978-1285432274
7th edition
Authors: Timothy R. Mayes, Todd M. Shank
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