Investors in IBM common stock expect the firm to pay a dividend next year of $1.79 per share. Investors also expect these dividends to grow at a rate of 6% per year. The price of IBM common stock is currently $76 per share. Based on this information, IBM's current cost of common equity capital is closest to which of the following?

Investors in IBM common stock expect the firm to pay a dividend next year of $1.79 per share. Investors also expect these dividends to grow at a rate of 6% per year. The price of IBM common stock is currently $76 per share. Based on this information, IBM's current cost of common equity capital is closest to which of the following?

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 5P: A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s...

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