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Business, 22.04.2021 18:50 fangirl2837

Longing Toys Inc. has just paid an annual dividend of $0.52 per share. Analysts expect the firm's dividends to grow by 5% forever. Its stock price is $38.2 and its beta is 1.2. The risk-free rate is 3% and the expected return on the market portfolio is 10%. Its bonds have a yield to maturity of 8%, and the risk-premium of Longing's stock over its bonds is 5%. What is the cost of equity from retained earnings according to the bond yield plus risk premium approach?

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Longing Toys Inc. has just paid an annual dividend of $0.52 per share. Analysts expect the firm's di...
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