Question

You have assigned the following values to these three firms:
 

  Price Upcoming Dividend Growth Beta
  Estee Lauder $50.00 $1.70 16.50% 0.74
  Kimco Realty 82.00 1.68 11.00 1.51
  Nordstrom 10.00 0.60 13.00 1.02


Assume that the market portfolio will earn 15.50 percent and the risk-free rate is 6.40 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 ____.__% ____.__%
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