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Category > Accounting Posted 24 May 2017 My Price 8.00

The earnings, dividends, and stock price of Talukdar Technologies Inc

 

The earnings, dividends, and stock price of Talukdar Technologies Inc. are expected to grow at 7 percent per year in the future. Talukdaris common stock sells for $23 per share, its last dividend was $2.00, and the company will pay a dividend of $2.14 at the end of the current year.

a. Using the discounted cash flow approach, what is its cost of retained earnings?

b. If the firm's beta is 1.6, the risk-free rate is 9 percent, and the average return on the market is 13 percent, what will be the firm's cost of equity using the CAPM approach?

c. If the firm's bonds earn a return of 12 percent, what will rs be using the bond-yield-plus-risk-premium approach? (Hint Use the midpoint of the risk premium range discussed in the chapter.)

d. Based on the results of parts a through c, what would you estimate Talukdar's cost of retained earnings to be?

 

 

 
 

Answers

Alpha Geek
(8)
Status NEW Posted 24 May 2017 08:05 AM My Price 8.00

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file 1495612859-Answer.docx preview (335 words )
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