A firm issued common stock that paid a $1.50 dividend lastyear. The dividend growth rate is 5.2% per year, and thecurrent stock price is $22.75. What is the cost of commonequity?

To calculate the cost of common equity, we can use the Dividend Discount Model (DDM) formula:…

Answered: A firm issued common stock that paid a…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 18MC

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A firm issued common stock that paid a $1.50 dividend last year. The dividend growth rate is 5.2% per year, and the current stock price is $22.75. What is the cost of common equity?