kelley couriers just paid its annual dividend of $5.25 per share. the stock has a market price of $58.25 and a beta of 1.2. the return on the u.s. treasury bill is 1 percent and the market risk premium is 8.5 percent. what is the cost of equity? multiple choice 8.8% 10.0% 10.2% 8.5% 11.2%

Question

Kentuky1956 Kentuky1956

25-10-2022
Business

Answered

kelley couriers just paid its annual dividend of $5.25 per share. the stock has a market price of $58.25 and a beta of 1.2. the return on the u.s. treasury bill is 1 percent and the market risk premium is 8.5 percent. what is the cost of equity? multiple choice 8.8% 10.0% 10.2% 8.5% 11.2%

Answer :

Other Questions

When a tax is placed on the sellers of cell phones, a) the size of the cell phone market and the price paid by buyers both decrease b) the size of the cell phon

When a tax is placed on the sellers of cell phones, A. the size of the cell phone market and the price paid by buyers both increase. B. the size of the cell pho

erica is analyzing the shares of songatikamascompany. the company currently pays a dividend of $2.50. she believes the company has a new product that will resul

Erica is analyzing the shares of SongatikamasCompany. The Company currently pays a dividend of $2.50. She believes the company has a new product that will resul

Allie and sarah decided that they want to purchase renters insurance for the apartment they share. they made a list of all of the items to be covered by the ins

Cherie pays her car insurance monthly. Her annual premium is $984. Each month she is charged a $2 convenience fee. If her annual premium is divided equally into

An investor has an account with stock from two different companies. Last year, his stock in company a was worth $4300 and his stock in company b was worth $3040

a market economy has several benefits, but it also has some drawbacks. what is one negative effect a market economy can produce? a. it creates extreme divisions

A 2-pint bottle of water costs $2.60. what is the price per cup?

Allison would like to find all records that are in stock. In her database, she has a field named "in stock. " when the item is in stock, a "yes" appears. What s

kumarravichandra kumarravichandra · Answer 1 · 2022-10-28T08:36:43-04:00

Use Capital Asset Pricing Model (CAPM) to find the cost of equity; the required rate of return by investors if they choose to buy kelley couriers stock.

CAPM ; r = risk free +Beta(Market risk premium)

risk free = 1% or 0.01 as a decimal

Beta = 1.2

Market risk premium = 8.5% or 0.085 as a decimal

CAPM ; r =0.112

r = 0.112

CAPM rate of return is 11.2%

Therefore, kelley couriers cost of equity = 11.2%

To know more about CAPM visit here :

https://brainly.com/question/14029804

#SPJ4