The Drogon Co. just issued a dividend of $2.70 per share on its common stock. The...

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Question

The Drogon Co. just issued a dividend of $2.70 per share on its common stock. The company is expected to maintain a constant

Answer 1

Answer #1

Ans.	Cost of equity = [Dividend per share * (1 + growth rate) / Stock price] + Growth rate
	[$2.70 * (1 + 0.056) / $54] + 0.056
	[$2.70 * 1.056 / $54 + 0.056
	$2.8512 / $54 + 0.056
	0.0528 + 0.056
	0.1088 or 10.88%

Answer 2

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