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You have assigned the following values to these three firms:

                              Price           Upcoming             Dividend Growth                 Beta

US Bancorp         $ 49.15           $ 3.70                        7.60 %                           1.85

Praxair                    53.45              1.57                      15.00                             2.46

Eastman Kodak       14.85             1.00                        7.50                               0.94

Assume that the market portfolio will earn 10.60 percent and the risk-free rate is 3.00 percent.

Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

                                                                            CAPM                         Constant-growth model

US Bancorp required return                                             %                                                        %

Praxair required return                                                     %                                                        %

Eastman Kodak requirement return                                 %                                                        %

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92800306

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