Analyze nestle csr initiative plan focuses on society issues
This is a CSR project, and choose to nestle as our company Note: Please give answer on mentioned words (must add intext citation) and required
Assignment ID: FG132573478
Assume you expect a company’s net income to remain stable at $2,000 for all future years, and you expect all earnings to be distributed to stockholders at the end of each year, so that common equity also remains stable for all future years (assumes clean surplus). Also, assume the company’s β = 1.5, the market risk premium is 6% and the 20-year yield on risk free treasury bonds is 2%. Finally, assume the company has 1,000 shares of common stock outstanding.
Question a. Use the CAPM to estimate the company’s equity cost of capital.
Question b. Compute the expected net distributions to stockholders (dividends) for each future year.
Question c. Use the dividend discount (i.e., free cash flow to equity investors) valuation model to estimate the company’s current stock price.