Problemstock in cdb industries has a beta of 090 the market, Ask an Expert

Accounting

Problem:

Stock in CDB Industries has a beta of 0.90. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent. CDB's most recent dividend was $1.90 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely.

Required:

Question: If the stock sells for $41 per share, what is your best estimate of CDB's cost of equity?

Note: Provide support for your rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173296

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