Oceanview Hotel's common stock is currently $45 a share. The company expects to pay a dividend of $4 a share at year-end, and the dividend growth rate is 6% a year. What is its cost of common equity?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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Oceanview Hotel's common stock is currently $45 a share. The
company expects to pay a dividend of $4 a share at year-end, and
the dividend growth rate is 6% a year. What is its cost of common
equity?
Transcribed Image Text:Oceanview Hotel's common stock is currently $45 a share. The company expects to pay a dividend of $4 a share at year-end, and the dividend growth rate is 6% a year. What is its cost of common equity?
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