Qualcomm Inc. is a world leader in 3G and mobile technologies. Its most recent stock price was $63. Qualcomm just paid $0.90 as dividend, and this dividend is expected to grow at a 6% rate. The stock beta is equal to 1.6 and the expected return of the market is 12.3%. The treasury bill is providing a yield of 5.6%
Calculate cost of common equity for Qualcomm using all possible methods.
Are your results different when you change methods? Why?
What estimation would you use for Qualcomm’s common equity?