IBM expects to pay a dividend of $4 next year and expects these dividends to grow at 8% a year. The price of IBM is $85 per share. What is IBM's cost of equity capital? O A. 5.08% B. 12.71% C. 3.81% D. 8%

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
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IBM expects to pay a dividend of $4 next year and expects these dividends to grow at 8% a year. The price of IBM is $85 per share. What is IBM's cost of equity
capital?
O A. 5.08%
B. 12.71%
C. 3.81%
D. 8%
Transcribed Image Text:IBM expects to pay a dividend of $4 next year and expects these dividends to grow at 8% a year. The price of IBM is $85 per share. What is IBM's cost of equity capital? O A. 5.08% B. 12.71% C. 3.81% D. 8%
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