Problemstock in cdb industries has a beta of 91 the market, Ask an Expert

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Problem:

Stock in CDB Industries has a beta of .91. The market risk premium is 7.1 percent, and T-bills are currently yielding 4.1 percent. CDB's most recent dividend was $2.00 per share, and dividends are expected to grow at a 5.1 percent annual rate indefinitely.

Required:

Question: If the stock sells for $42 per share, what is your best estimate of CDB's cost of equity?

Note: Explain the solution in detail.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173532

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