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Cost of equity for Ajax using the dividend valuation

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Cost of equity for Ajax using the dividend valuation 1. James builds brick walls for customer’s homes. His annual sales are 300K, net income of 18K. Assets are 100k invested in his business. Tom sells window shades. . His annual sales are 900K, net income of 27K. Assets are 150k invested in his business. a. Compute the net profit margin for both James and Tom. b. Compute the asset turnover for both James and Tom. c. Compare the profitability of these two firms and discuss the similarities and differences. 2. Two Part Question: a. Part A –Why is it that for a given firm, the required rate of return on equity is always greater than the required rate of return on its debt? b. Part B – Ajax, Inc has a common stock outstanding that has a market price of $48 per share. Last year’s dividend was $2.25 and is expected to grow at a rate of 4% forever. The expected market premium is 5.5%. The company’s beta is 1.2. i. What is the cost of equity for Ajax using the dividend valuation ii. What is the cost of equity for Ajax using the capital asset pricing model? Accounts Assignment Help, Accounts Homework help, Accounts Study Help, Accounts Course Help

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