A firm's most recent annual dividend was $2 per share; its shares sell for $40 in the stock market, and the company expects its dividend to grow at a constant rate of 5% in the foreseeable future
Using the dividend growth (Gordon) model, what would you estimate its equity cost of capital to be?
10.25% = [(2 )(1.05 )/(40 + .05 )]
Economics
You might also like to view...
As part of the "exchange rate effect of monetary policy," a lower money supply causes a __________ interest rate and thus __________ of the domestic currency
A) higher; appreciation B) higher; depreciation C) lower; appreciation D) lower; depreciation
Economics
If future total factor productivity increases
A) labor demand increases. B) government expenses increase. C) consumption demand decreases. D) investment demand increases.
Economics