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The CEO of Harding Media Inc. has asked you to help estimate its cost of common equity. You have obtained the following data: current
The CEO of Harding Media Inc. has asked you to help estimate its cost of common equity. You have obtained the following data: current dividend, DO = $0.85; current stock price, PO = $22.00; and growth rate g = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common change if the stock price changes as the CEO expects?
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The cost of common equity can be estimated using the Gordon Growth Model also known as the Dividend ...
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
14th Edition
0357516664, 978-0357516669
