Stock in Road Pave Zambia has a beta of .85. The market risk premium is 8 percent, and the Bank of Zambia treasury bills are currently yielding 5 percent. The company’s most recent dividend was K1.60...

Stock in Road Pave Zambia has a beta of .85. The market risk premium is 8 percent, and the Bank of Zambia treasury bills are currently yielding 5 percent. The company’s most recent dividend was K1.60 per share, and dividends are expected to grow at a 6 percent annual rate indefinitely. If the stock sells for K37 per share, what is your best estimate of the company’s cost of equity using both Gordon’s model and the Capital Asset Pricing Model (CAPM)?

May 04, 2022
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