You have assigned the following values to these three firms: Upcoming Dividend $1.30 1.46 0.70 Estee Lauder Kimco Realty Nordstrom Price $35.00 72.00 8.00 Growth 13.40% 13.00 11.00 Beta 0.82 1.32 1.04 Assume that the market portfolio will earn 19.40 percent and the risk-free rate is 8.40 percent. Compute the required return each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round you answers to 2 decimal places.)
You have assigned the following values to these three firms: Upcoming Dividend $1.30 1.46 0.70 Estee Lauder Kimco Realty Nordstrom Price $35.00 72.00 8.00 Growth 13.40% 13.00 11.00 Beta 0.82 1.32 1.04 Assume that the market portfolio will earn 19.40 percent and the risk-free rate is 8.40 percent. Compute the required return each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round you answers to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Raghubhai
Transcribed Image Text:You have assigned the following values to these three firms:
Upcoming
Dividend
$1.30
1.46
0.70
Estee Lauder
Kimco Realty
Nordstrom
Price
$35.00
72.00
8.00
Estee Lauder required return
Kimco Realty required return
Nordstrom required return
CAPM
Growth
Assume that the market portfolio will earn 19.40 percent and the risk-free rate is 8.40 percent. Compute the required return fo
each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your fi
answers to 2 decimal places.)
%
%
%
13.40%
13.00
11.00
Beta
0.82
1.32
1.04
Constant-Growth
Model
%
%
%
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