Question
After the expansion, assume the appropriate cost of equity rises to 20.0% from 15.0%. Using the dividend discount model with constant dividend growth, the stock
After the expansion, assume the appropriate cost of equity rises to 20.0% from 15.0%. Using the dividend discount model with constant dividend growth, the stock is fairly valued at __________ per share with a dividend yield of __________.
A) $119; 12.5%
B) $152; 7.9%
C) $152; 9.7%
D) $170; 7.9%
E) $170; 8.8%
Use the information below for this problem. A company is considering increasing current capacity. Financial statement information for both before and after the expansion is provided in the table below. Dividends were just paid today (T=0). All numbers, including shares outstanding, are reported in millions.
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