The stock of Alpha Tool sells for $70.20 per share. Its current dividend rate, D0, is $2 per share. Analysts and investors expect Alpha to increase its dividends at a 30 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 26 percent for years 3 and 4 and then to settle down to 24 percent per year forever. Calculate the cost of internal equity for Alpha Tool. Use Table II for your calculations. Round your answer to the nearest whole number.   %

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
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The stock of Alpha Tool sells for $70.20 per share. Its current dividend rate, D0, is $2 per share. Analysts and investors expect Alpha to increase its dividends at a 30 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 26 percent for years 3 and 4 and then to settle down to 24 percent per year forever. Calculate the cost of internal equity for Alpha Tool. Use Table II for your calculations. Round your answer to the nearest whole number.

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The stock of Alpha Tool sells for $70.20 per share. Its current dividend rate, D0, is $2 per share. Analysts and investors expect Alpha to increase its dividends at a 30 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 26 percent for years 3 and 4 and then to settle down to 24 percent per year forever. Calculate the cost of internal equity for Alpha Tool. Use Table II for your calculations. Round your answer to the nearest whole number.

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