Problemberta industries stock has a beta of 130 the company, Ask an Expert

Finance

Problem:

Berta Industries stock has a beta of 1.30. The company just paid a dividend of $0.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 6.3 percent. The most recent stock price for Berta is $80.

Required:

Question 1: Calculate the cost of equity using the DCF method.

Question 2: Calculate the cost of equity using the SML method.

Note: Please show how you came up with the solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162677

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