Week 03 - Ch 12 Closing Case pgs 392-393 2 To estimate the...

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Ch. 12 Closing Case pgs. 392-393 2. To estimate the cost of equity for Dell, go to finance.yahoo.com and enter the ticker symbol “Dell.” Follow the various links to find answers to the following questions: What is the most recent stock price listed for Dell? What is the market value of equity, or market capitalization? How many shares of stock does Dell have outstanding? What is the beta for Dell? Now go back to finance.yahoo.com and find the bonds link. What is the yield on 3-month Treasury bills? Using the historical market risk premium, what is the cost of equity for Dell using the CAPM? Recent Stock Price: 23.57 Market Capitalization: $52.7 Outstanding Shares of Stock: 2.24 Beta 1.7 r f = 0.49% Risk free rate β= 1.38 =beta r m -r f = 7.5% =market risk premium Ks = Substituting the values Ks = 10.84% =.49%+1.38*7.5% Ks= Cost of equity as per CAPM Model 3. Go to www.reuters.com/finance and find the list of competitors in the industry. Find the beta for each of these competitors, and then calculate the industry average beta. Using the industry
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Week 03 - Ch 12 Closing Case pgs 392-393 2 To estimate the...

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