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Lunatic Inc. is expected to pay a dividend of $1.20 per share next year. The current market price is $30, and the expected growth rate of dividends is 6%. What is the cost of equity?

Lunatic Inc. is expected to pay a dividend of $1.20 per share next year. The current market price is $30, and the expected growth rate of dividends is 6%. What is the cost of equity?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 16MC
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Lunatic Inc. is expected to pay a dividend of $1.20 per share next year. The current market price is $30, and the expected growth rate of dividends is 6%. What is the cost of equity?
Transcribed Image Text:Lunatic Inc. is expected to pay a dividend of $1.20 per share next year. The current market price is $30, and the expected growth rate of dividends is 6%. What is the cost of equity?
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