Assume the risk-free rate on long-term Treasury bonds is 6.04%. Assume also that the average annual return on the Winslow 5000 is 11% as the expected return on the market. Use the SML equation (i.e., CAPM) to calculate the two companies' required returns. Bartman Industries Reynolds Inc. YearStock PriceDividendHolding period returnStock PriceDividendHolding period return2020$17.25$1.15 $48.75$3.00 201914.751.06 52.302.90 201816.501.00 48.752.75 201710.750.95 57.252.50 201611.370.90 60.002.25 20157.62 55.75

In its most basic form, the average annual return (AAR) is a metric that quantifies how much money a…

ns. Bartman Industries Reynolds Inc. Year Stock Price Dividend Holding period return Stock Price Dividend Holding period return 2020 $17.25 $1.15 $48.75 $3.00 2019 14.75 1.06 52.30 2.90 2018 16.50 1.00 48.75 2.75 2017 10.75 0.95 57.25 2.50 2016 11.37 0.90

ns. Bartman Industries Reynolds Inc. Year Stock Price Dividend Holding period return Stock Price Dividend Holding period return 2020 $17.25 $1.15 $48.75 $3.00 2019 14.75 1.06 52.30 2.90 2018 16.50 1.00 48.75 2.75 2017 10.75 0.95 57.25 2.50 2016 11.37 0.90

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Dyer Furniture is expected to pay a dividend of D1 = $1.25 per share at the end of the year and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15. the market risk premium is 5.50%, and the risk-free rate is 4.00% What is Dyer's current stock price? a. $28.90 b. $29.62 C. $31.12 d. $30.36 e. $31.90
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None

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	Bartman Industries		Reynolds Inc.
Year	Stock Price	Dividend	Holding period return	Stock Price	Dividend	Holding period return
2020	$17.25	$1.15		$48.75	$3.00
2019	14.75	1.06		52.30	2.90
2018	16.50	1.00		48.75	2.75
2017	10.75	0.95		57.25	2.50
2016	11.37	0.90		60.00	2.25
2015	7.62			55.75