The Down and Out Co. just issued a dividend of $2.11 per share on its common stock. The company is expected to?

Question

maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $50 a share, the company's cost of equity is?

Answer 1

R (Cost of Capital) = Next Div / Stock Price + Growth Rate



R = (2.11 x 1.06) / 50 + 6%

R = 2.24 / 50 + .06

R = .045 + .06

R = .105, or 10.5%

Answer 2

cost of equity = {[dividend * ( 1 + growth rate)]/spot price} + growth rate

ke= [2.11*1.06]/50 + .06



gets a little messy so



cost of equity = 10.4732%

Answer 3

the only Acme i understand of is Acme Packet, which trades at $29 and alter, and pays no dividend. till this might properly be a homework query, wherein case the respond is (6) "i do no longer help those with homework."

Answer 4

I do not consider that's true

Answer 5

that is not completely true