The Tribiani Company just issued a dividend of $2.90 per share on its common stock. The company is expected to maintain a constant8 percent growth rate in its dividends indefinitely. If the stock sells for $44.70 a share, what is the company's cost of equity?Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.Cost of equity

Step 1:We have to calculate the cost of equity using the dividend discount model. The formula of…

Answered: The Tribiani Company just issued a…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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Kindly help me with general Accounting question
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 4% per year. Callahan's common stock currently sells for $26.75 per share; its last dividend was $2.00; and it will pay a $2.08 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % b. If the firm's beta is 1.5, the risk-free rate is 4%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % c. If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rg? Use the judgmental risk premium of 4% in your calculations. Round your answer to two decimal places. d. If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Do not round…

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