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Posted by: johnsonj
Price Quoted by Student: $1
Posted On: 2011-06-04 03:03:51
 
Question

14. Cost of Equity. Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 30 percent, and the current dividend yield is 2 percent. Its beta is 1.2, the market risk premium is 8 percent, and the risk-free rate is 4 percent.

a. calculate two estimates of the firm’s cost of equity.

b. which estimate seems more reasonable to you, Why?


Solutions
a. calculate two estimates of the firm’s cost of
Price $3.5
Attachment 1: Bunkhouse Electronics is.doc
Solution Posted By: Johnsonj    Posted on: 04-06-2011