Question
Li & Sons common stock currently trades at $70 a share. It is expected to pay an annual dividend of $2.45 a share at the
Li & Sons common stock currently trades at $70 a share. It is expected to pay an annual dividend of $2.45 a share at the end of the year (D 1 = $2.45), and the constant growth rate is 7.9 percent a year. What is the companys cost of common equity if all of its equity comes from retained earnings?
| a. | 11.40% | |
| b. | 11.68% | |
| c. | 3.78% | |
| d. | 14.82% | |
| e. | 3.50% |
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