Abc co. is expecting to pay a dividend of $1.98 in the upcoming year and further anticipates growing the dividend at a constant rate of 3.5% per year, indefinitely. if the current share price is $25, then what is the cost of equity according to the gordon growth model?
Solved
Show answers
More tips
- F Food and Cooking Which Calamari Salad is the Most Delicious?...
- S Style and Beauty How are artificial nails removed?...
- S Style and Beauty Secrets of Tying a Pareo: 5 Ways...
- F Food and Cooking Everything You Need to Know About Pasta...
- C Computers and Internet How to Choose a Monitor?...
- H Horoscopes, Magic, Divination Where Did Tarot Cards Come From?...
- S Style and Beauty How to Make Your Lips Fuller? Ideas and Tips for Beautiful Lips...
- C Computers and Internet How to Learn to Type Fast?...
Answers on questions: Business
- B Business Ano ang ibig sabihin ng copyright sa isang monopolyadong merkado?...
- B Business Brian is applying for a job as a registered nurse at a large medical facility. Today, before his interview with the hiring manager, Brian is asked to give a blood sample to screen...
- B Business 4. You are distressed why your boss asks you to charge a late fee to customers who miss the deadline. You believe that a late fee is clearly unjustified; late orders cause no real...
- B Business How to inflate myself like a balloon...
- S Social Studies Marcus believes that individual rights and property are the most important things the government must protect. Which party would he most likely join and why? - civics...
- H History Which dynasty controlled the region now known as China during its “golden age,” from 206 BCE to 220 CE?...
- M Mathematics 1+2x6+7= -13 where do i have to put the parenthesis so its correct...
- P Physics Help me please :) Answer the following questions to explain the relationship between electricity and magnetism. • What are the critical components of an electromagnet and what purpose...
- E English A student plans on interviewing 15 principles in neighboring high schools the student plans to collect data about the personal experience the principles have had with disruptive...
- H History How did Hamilton s and Jefferson s beliefs on the power of state governments differ? Jefferson believed that the state governments should while Hamilton believed that the state governments...
Ответ:
0.1142 or 11.42%
Explanation:
In this question, we apply the Gordon Growth model which is presented below:
= (Current year dividend ÷ current share price) + Growth rate
= ($1.98 ÷ $25) + 3.5%
= 0.0792 + 0.035
= 0.1142 or 11.42%
We simply applied the above formula to find out the cost of equity by considering the current year dividend, current share price ,and the growth rate
Ответ: