Question

Asked Feb 4, 2020

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NoGrowth Corporation currently pays a dividend of $2 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 15% per year?

Step 1

**Cost of equity:**

The cost of equity is the minimum rate of return that an investor expects while contributing or investing in a firm's common share or equity shares.

Step 2

**The formula as per Dividend-price approach:**

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