Investors in IBM common stock expect the firm to pay a dividend next year of $1.79 per share. Investors also expect these dividends to grow at a rate of 6% per year. The price of IBM common stock is currently $76 per share. Based on this information, IBM's current cost of common equity capital is closest to which of the following?
Investors in IBM common stock expect the firm to pay a dividend next year of $1.79 per share. Investors also expect these dividends to grow at a rate of 6% per year. The price of IBM common stock is currently $76 per share. Based on this information, IBM's current cost of common equity capital is closest to which of the following?
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 10P
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Question 22
![Investors in IBM common stock expect the firm to pay a dividend next year of
$1.79 per share. Investors also expect these dividends to grow at a rate of 6%
per year. The price of IBM common stock is currently $76 per share. Based on
this information, IBM's current cost of common equity capital is closest to which
of the following?
A. 6.00%
В. 3.64%
С. 2.36%
D. 8.36%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3966b9a7-fe71-44cf-b953-e8752bb97164%2F2dc5259d-b9f2-416d-ab07-c1d72b727c65%2Fnxo0yio_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Investors in IBM common stock expect the firm to pay a dividend next year of
$1.79 per share. Investors also expect these dividends to grow at a rate of 6%
per year. The price of IBM common stock is currently $76 per share. Based on
this information, IBM's current cost of common equity capital is closest to which
of the following?
A. 6.00%
В. 3.64%
С. 2.36%
D. 8.36%
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