The Down and Out Co. just issued a dividend of $2.71 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $30 a share, what is the company's cost of equity?

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A: Current Dividend  $            1.20 Rate of return 10.70% Growth Rate 1.00%     Share Price…

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A: Formulas:

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A: current price = 1.75 * 1.05/(0.09 - 0.05) = 45.94 The stock is undervalued by 5.94

Q: Please Help me with this question

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Q: what is the stock price

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A: Using Dividend Discoutn Model

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