A company has just declared dividend of GH¢50 per share and this is yet to be paid. The dividend is expected to grow at 10% per annum forever, and price cum Div is GH¢ 700 per share. What is the cost of equity?

A company has just declared dividend of GH¢50 per share and this is yet to be paid. The dividend is expected to grow at 10% per annum forever, and price cum Div is GH¢ 700 per share. What is the cost of equity?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

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Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

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