National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 a share. The dividend growth rate is 2.2 percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost of equity using the average return of the CAPM and the dividend discount model? Multiple Choice 9.68 percent 10.30 percent 8.67 percent 10.05 percent 9.13 percent
National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 a share. The dividend growth rate is 2.2 percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost of equity using the average return of the CAPM and the dividend discount model? Multiple Choice 9.68 percent 10.30 percent 8.67 percent 10.05 percent 9.13 percent
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject - account
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Transcribed Image Text:National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 a share. The dividend growth rate is 2.2
percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost of equity using the average
return of the CAPM and the dividend discount model?
Multiple Choice
9.68 percent
10.30 percent
8.67 percent
10.05 percent
9.13 percent
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