solution
- The Walt Disnay Company would like to calculate its cost of equity. The company has a beta of 20. The market risk premium is 5% and the risk free rate is 3%. Stock price today is $177.38, and it has paid the following dividends over the past 6 years.
|
Year |
Dividend |
|
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$1.29 |
|
2016 |
$1.37 |
|
2017 |
$1.49 |
|
2018 |
$1.62 |
|
2019 |
$1.72 |
|
2020 |
$1.82 |
- Calculate dividend growth rate. Express your answers in percentage form with two decimal places – 0.00%.
- Calculate The Walt Disnay Company’s Cost of Equity using dividend growth model. Express your answers in percentage form with two decimal places – 0.00%.
- Calculate The Walt Disnay Company’s Cost of Equity using the CAPM. Express your answers in percentage form with two decimal places – 0.00%.
- Determine the cost of equity that you would use and explain why (1-2 sentences).
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