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Question

8.
The earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow at 7 percent per year in the future. Carpetto's common stock sells for $23 per share, its last dividend was $2.00, and it will pay a dividend of $2.14 at the end of the current year.

If the firm's beta is 1.6, the risk-free rate is 9 percent, and the average return on the market is 13 percent, what will be the firm's cost of common equity using the CAPM approach?



(Points: 4)



9.
The earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow at 7 percent per year in the future. Carpetto's common stock sells for $23 per share, its last dividend was $2.00, and it will pay a dividend of $2.14 at the end of the current year.

If the firm's bonds earn a return of 12 percent, what will rs be based on the bond-yield-plus-risk-premium approach, using the midpoint of the risk premium range?



(Points: 4)

Submitted: 256 days and 15 hours ago.
Category: Finance
Value: $9
Status: CLOSED

Accepted Answer

Hello Pargirl

 

Please click here for the solutions

 

Regards,

 

 

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Expert: BusinessTutor
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Accepts: 
Answered: 3/11/2009

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