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Kimona Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 = $0.85; P0
Kimona Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 = $0.85; P0 = $20.00; and g = 4.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $50.00. Based on the DCF approach, by how much would the cost of common stock from retained earnings change if the stock price changes as the CEO expects?
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