Question

You have assigned the following values to these three firms:

  

	Price			Upcoming Dividend							Growth			Beta
Estee Lauder	$	41.00				$	1.80				13.60	%		1.01
Kimco Realty		50.00					1.63				15.00			1.41
Nordstrom		17.00					0.90				9.00			0.91

  

Assume that the market portfolio will earn 16.60 percent and the risk-free rate is 4.60 percent.

   

Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

  

	CAPM	Constant-growth model
Estee Lauder required return	%	%
Kimco Realty required return	%	%
Nordstrom required return	%	%

Answer 1