Question
A companys stocks/shares are listed in the market at TK20per share but the shares currently traded/sold at a price of TK40(P 0 ),and last year
A company’s stocks/shares are listed in the market at TK 20 per share but the shares currently traded/sold at a price of TK 40(P0), and last year the company paid 10 % dividend (D0).
a) What will be the cost of equity if the company pays similar i.e. 10% dividend next year (D1).
b) What will be the cost of equity if the dividends are expected to grow 6% next year?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
a The cost of equity Ke can be calculated using the Gordon Growth Mod...
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Step: 3
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th International Edition
1265533199, 978-1265533199
