Answered

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Estimate the required rate of return on Hydro One's common equity (Ke) using the following approaches:
(a) CAPM
(b) Bond Yield plus Risk Premium (BYPRP)
(c) DDM - use both the Single-Stage (i.e., Constant) Growth DDM and the H-Model (assuming 4 years until short-term growth rate returns to long-term growth rate). .
Include your best estimate and a range of possible estimates. . Show details for all calculations for all methods used, briefly justify your inputs and assumptions, and show the weighting of each method into your final determination of Ke. . Your final estimates should apply the approaches discussed in class, and apply solid finance judgment !

Sagot :

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