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Cost of Equity using Gordon: To figure out the cost of equity, use the Gordon dividend growth model (D1 divided by r-g, or r =

Cost of Equity using Gordon: To figure out the cost of equity, use the Gordon dividend growth model (D1 divided by r-g, or r = (D1/Po) + g

  1. Growth can be approximated as the Return on Equity (ROE) x (1- Dividend payout ratio). Please note that ROE is provided in the case =8.9%)
  2. Dividends in the previous year are presented in the case and it is $2.08 (that is LAST year's dividend)
  3. The price of Walmart at this time was $102.20 (about 1 page)

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