Answer to Question #292152 in Economics for sai

Question

The ABC stock has a beta of 1.4. The company just paid a dividend of $2.0, and the dividend is expected to grow at 6% per year, indefinitely. The expected market return is 14%, and the risk-free is 4%. The most recent stock price for ABC is $60. Calculate the cost of equity using the SML method.

 

Answer 1

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