You have assigned the following values to these three firms: Upcoming Dividend Growth $1.80 1.37 0.70 Estee Lauder Kimco Realty Nordstrom Price $31.00 53.00 12.20 Estee Lauder required return Kimco Realty required return Nordstrom required return Assume that the market portfolio will earn 11.10 percent and the risk-free rate is 6.60 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) CAPM % % 14.00% 13.00 13.00 % Beta 0.73 1.65 1.86 Constant-Growth Model % %
You have assigned the following values to these three firms: Upcoming Dividend Growth $1.80 1.37 0.70 Estee Lauder Kimco Realty Nordstrom Price $31.00 53.00 12.20 Estee Lauder required return Kimco Realty required return Nordstrom required return Assume that the market portfolio will earn 11.10 percent and the risk-free rate is 6.60 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) CAPM % % 14.00% 13.00 13.00 % Beta 0.73 1.65 1.86 Constant-Growth Model % %
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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Transcribed Image Text:You have assigned the following values to these three firms:
Upcoming
Dividend
Estee Lauder
Kimco Realty
Nordstrom
Price
$31.00
53.00
12.20
$1.80
Estee Lauder required retur
Kimco Realty required return
Nordstrom required return
1.37
0.70
CAPM
Growth
Assume that the market portfolio will earn 11.10 percent and the risk-free rate is 6.60 percent. Compute the required return for each
company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers
to 2 decimal places.)
%
%
%
14.00%
13.00
13.00
Beta
0.73
1.65
1.86
Constant-Growth
Model
%
%
%
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