a.
To calculate: The past growth rate in the earnings.
It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.
b.
To calculate: The next expected dividend
c.
To identify: The cost of
Cost of Retained Earnings:
A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per
If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.
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Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
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