1. Chelsea Fashions is expected to pay an annual dividend of $0.80 a share next year. The market price of the stock is $22.40 and the growth rate is 5 percent. What is the firm's cost of equity as per the DDM? A. 7.58% B. 7.91% C. 8.24% D. 8.57%

1. Chelsea Fashions is expected to pay an annual dividend of $0.80 a share next year. The market price of the stock is $22.40 and the growth rate is 5 percent. What is the firm's cost of equity as per the DDM? A. 7.58% B. 7.91% C. 8.24% D. 8.57%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Question

1. Chelsea Fashions is expected to pay an annual
dividend of $0.80 a share next year. The market
price of the stock is $22.40 and the growth rate is
5 percent. What is the firm's cost of equity as per
the DDM?
A. 7.58%
B. 7.91%
C. 8.24%
D. 8.57%

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