Multiple Choice
Stock in Country Road Industries has a beta of 0.97.The market risk premium is 10 percent while T-bills are currently yielding 5.5 percent.Country Road's most recent dividend was $1.55 per share,and dividends are expected to grow at a 7 percent annual rate indefinitely.The stock sells for $32 a share.What is the estimated cost of equity using the average of the CAPM approach and the dividend discount approach?
A) 13.69 percent
B) 14.06 percent
C) 14.21 percent
D) 14.38 percent
E) 14.50 percent
Correct Answer:
Verified
Correct Answer:
Verified
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