A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5 percent. The cost of the firm’s common stock equity is
A. 5 percent.
B. 8 percent.
C. 10 percent.
D. 13 percent.
Answer:D
A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5 percent. The cost of the firm’s common stock equity is
A. 5 percent. B. 8 percent. C. 10 percent. D. 13 percent.