The Drogon Company just issued a dividend of $2.81 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of equity?
The Drogon Company just issued a dividend of $2.81 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, what is the company's cost of equity?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Cc. 173.
Transcribed Image Text:The Drogon Company just issued a dividend of $2.81 per share on its common stock.
The company is expected to maintain a constant 5 percent growth rate in its dividends
indefinitely. If the stock sells for $50 a share, what is the company's cost of equity?
Transcribed Image Text:Multiple Choice
O
O
O
O
O
11.45%
10.36%
6%
10.62%
10.9%
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