Question 4 1 pts O\'Brien Inc. has the following data: Rf-5.00%; MRP-6.00%; and

Question

Question 4 1 pts O'Brien Inc. has the following data: Rf-5.00%; MRP-6.00%; and b-1.10, what is the firm's cost of equity from retained earnings based on the CAPM? O O O O a) 11.83% b) 13.22% c) 11.25% d) 8.93% e) 11.60% O Question 5 1 pts Assume that you are a consultant to Broske Inc., and you have been provided with the following data D1-$0.67; P0-$42.50, and g-8.00% (constant). what is the cost of equity from retained earnings based on the DCF approach? 0 a) 11.30% O b) 9.58% O c) 9.96% O d) 11.68% O e) 7.95%

Explanation / Answer

1.Cost of equity=Risk free rate+Beta*Market risk premium

=5+(1.1*6)

=11.60%

2.Cost of equity=(Dividend for next period/Current price)+Growth rate

=(0.67/42.5)+0.08

=9.58%(Approx)

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.