Chec Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings...
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Chec Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems. Its earnings and dividends have been growing at a rate of 37.5%, and the current dividend yield is 9.50%. Its beta is 1.35, the market risk premium is 15.50%, and the risk-free rate is 2.50%. a. Use the CAPM to estimate the firm's cost of equity. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of equity % es b. Now use the constant growth model to estimate the cost of equity. (Do not round intermediate calculations. Enter your answer as a whole percent.) Cost of equity %
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