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

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Problem:

Floyd Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent per year. The expected return on the market is 13 percent, and Treasury bills are yielding 4.8 percent. The most recent stock price for Floyd is $65.

Required:

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

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

Note: Please show the work not just the answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148615

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