Procter and gamble (pg) has a june fiscal year-end. on june 30, 2006, analysts expected the company to pay $1.33 dividends per share in fiscal year 2007. the company's market beta is estimated to be 0.7. assume that the risk-free rate is 5.7% and the market premium is 5%. during fiscal year 2006, the company's sales growth was 20.2%. however, analysis reveals that p& g's fiscal 2006 sales include eight months of sales from gillette after its acquisition by p& g during 2006. footnotes report pro forma sales that show what the income statement would have reported had gillette's full-year sales been included in both 2005 and 2006—specifically, p& g's sales growth would have been 4.4%.
(a) estimate p& g's cost of equity capital using the capm model. (round your answer to one decimal place.)

9.2%

Explanation:

CAPM is short for capital asset pricing model. This is a technique of valuing the cost of capital that uses the stock's beta( a measure of the stock's volatility in the market), the risk-free and market rates.  

CAPM = + (-

Given,

Risk-free rate, = 5.7%

Beta, =0.7

Market premium, = 5%

Thus, using CAPM.

P&G's cost of equity capital = 5.7% + 0.7(5%)

                   = 5.7% + 3.5%

                   = 9.2%

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23

answer; (a) calling people who have not shown interest in the product and asking them to buy it;