Answered: ABC Ltd. just declared and paid a…

ABC Ltd. just declared and paid a dividend @ 15% on equity shares of Rs 100 each. The expected future growth rate is 12%. Current market price of share = Rs 168. Calculate cost of equity.

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 1P: Thress Industries just paid a dividend of 1.50 a share (i.e., D0 = 1.50). The dividend is expected...

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Question

ABC Ltd. just declared and paid a dividend @ 15% on equity shares of Rs
100 each. The expected future growth rate is 12%.
Current market price of share = Rs 168.
Calculate cost of equity.

Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

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