Cost of equity by using discounted cash flow approach.

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Answer 1

Question

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

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Answer 2

Question

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

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Answer 3

Question

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

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Answer 4

Question

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

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Answer 5

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

Answer 6

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

Answer 7

Chapter 11, Problem 10P

a)

Summary Introduction

To determine: Cost of equity by using discounted cash flow approach.

Answer 8

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

Answer 9

b)

Summary Introduction

To determine: Firm’s cost of equity based on CAPM.

Answer 10

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

Answer 11

c)

Summary Introduction

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

Answer 12

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

Answer 13

d)

Summary Introduction

To discuss: The estimate of Company S’s cost of equity based on results.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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Cost of equity by using discounted cash flow approach.

Solution Summary: The author analyzes the cost of equity by using discounted cash flow approach. The bond-yield-plus—judgemental-risk-premium technique and the CAPM (Capital asset pricing model) both resulted

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To determine: Cost of equity by using discounted cash flow approach.

To determine: Firm’s cost of equity based on CAPM.

To determine: Firm’s cost of equity based on own-bond-yield-plus-judgemental-risk-premium approach.

To discuss: The estimate of Company S’s cost of equity based on results.

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