annual rate in the future as they did over the past five years
A. What is the estimated cost of common equity to the firm using the dividend growth model?
b. Hetterbrands CFO has asked his financial analyst to estimate the firms cost of common equity using the CAPM as a way of validating the earlier calculations .
The risk free rate of interest is currently 4.9 percent the market risk premium is estimated to be 5.1 percent and Hetterbrands beta is 0.81. What is tour estimate of the firms cost of common equity using this method?