Laverne Industries stock has a beta of 1.15. The company just paid a dividend of
ID: 2622163 • Letter: L
Question
Laverne Industries stock has a beta of 1.15. The company just paid a dividend of $.95, and the dividends are expected to grow at 4 percent. The expected return of the market is 11.5 percent, and Treasury bills are yielding 3.8 percent. The most recent stock price is $81.
Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Explanation / Answer
Laverne Industries stock has a beta of 1.15. The company just paid a dividend of
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