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5. Chapter MC, Section .09, Problem 040 The CEO of Harding Media Inc. as asked you to help estimate its cost of common equity. You

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5. Chapter MC, Section .09, Problem 040 The CEO of Harding Media Inc. as asked you to help estimate its cost of common equity. You have obtained the following data: Do = $0.85; Po= $22.00; and g = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common from reinvested earnings change if the stock price changes as the CEO expects? Oa. -2.03% Ob. -1.66% Oc. -1.84% Od. -1.49% Oe. -2.23%

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