Ask Question
5 August, 05:06

Southern Home Cookin' just paid its annual dividend of $.65 a share. The stock has a market price of $26 and a beta of 0.8. The return on the U. S. Treasury bill is 4 percent and the market risk premium is 13 percent. What is the cost of equity?

+3
Answers (1)
  1. 5 August, 05:13
    0
    Here the COE (cost of equity) is 14.4%

    Explanation:

    Given information -

    Beta-.8

    Treasury bill return - 4%

    Market risk premium - 13%

    Formula for taking out cost of equity -

    Return on treasury bill + Beta x Market risk premium

    = 4% +.8 x 13%

    =.04 +.8 x. 13

    =.04 +.104

    =.144

    Multiplying by 100 to make it in percentage

    =.144 x 100

    = 14.4%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Southern Home Cookin' just paid its annual dividend of $.65 a share. The stock has a market price of $26 and a beta of 0.8. The return on ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers