The earnings, dividends and stock price for Luna Enterprises…

The earnings, dividends and stock price for Luna Enterprises are expected to grow at 7% per year into the future. Luna’s common stock sells for $23 per share, its last dividend was $2.00, and the company will pay a dividend of $2.14 at the end of the current year. The firm’s beta is 1.6, the risk-free rate is 9%, and the expected return on the market is 13%. What is the firm’s cost of equity by (a) the discounted cash-flow method, and (b) by the CAPM method.

You’ve just done some analysis on a publicly traded company…

You’ve just done some analysis on a publicly traded company and some of your key findings are below. The company;  Operates in a highly innovative and high growth industry which is expected to continue for the next 5 years before the industry matures The company is an industry leader with some of the best metrics relative to peers Has an ROE of 25% Operates in a world where long term GDP is approximately 4% Does not pay a dividend Given these considerations, what is the most appropriate sustainable growth rate (terminal value growth rate) to use for this company?