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To help estimate your cost of capital, you have obtained the following data: D0=$0.85;P0=$22.00; and g=6.00% (constant). The CEO thinks that the stock price will
To help estimate your cost of capital, you have obtained the following data: D0=$0.85;P0=$22.00; and g=6.00% (constant). The CEO thinks that the stock price will soon rise to $37.00. Based on the DCF approach, by how much would the cost of equity from retained earnings change if the stock price changes as the CEO expects? \begin{tabular}{l} 1.84% \\ \hline2.03% \\ \hline2.23% \\ \hline1.66% \\ \hline1.49% \end{tabular}
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