Forum Archive Index - May 2004

["Fiona Phibbs" <fibz@xtra.co.nz>]

Hi Snoopy

< 're'='rf'+ (beta)( E(rm)-'rf' )
>
> Where 'rf' is the risk free rate of return, and
> E(rm) is the expected rate of market return.

I added market risk premium to the rfr to get the expected return for the
market of 13.37%

> Again using your figures Dean I get
>
> = 5.87%+ (0.84)( 7.5% - 5.87% )= 7.24%.

I get = 5.87 + (0.84)(13.37-5.87)  = 12.17%
Dont you think your expected return for the market is a little low?

> If I take this years core dividend of 2.5c + 6c= 8.5c as my starting
  Are you able
> to reconcile your result with my calculation?

I used 11.5c
And my growth rate was 2.42%

Cheers Dean


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