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Busıness Fınance Iı Deneme Sınavı Sorusu #974246
Busıness Fınance Iı Deneme Sınavı Sorusu #974246
ABC Corp. distributes 60% of its net income as dividends. The firm’s ROE is 16% and last year stockholders received $1.60 dividends per share. Currently the stock sells at $34.60.
What is the cost of equity of ABC Corp.?
ABC Corp. distributes 60% of its net income as dividends. The firm’s ROE is 16% and last year stockholders received $1.60 dividends per share. Currently the stock sells at $34.60.
What is the cost of equity of ABC Corp.?
|
3.46% |
|
5.64% |
|
6.34% |
|
11.32% |
|
18.11% |
Yanıt Açıklaması:
The expected growth rate of ABC Corp. is:
PRS retains 40% of its net income, thus the expected growth rate is 6.40% when calculated from the retention growth model. Hence, the cost of equity is 11.32%. The correct answer is D.
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