Homework Answers
Ans 18.00%
| P0 = | Price of Share |
| D1 = | Current Dividend |
| Ke = | Cost of Equity |
| g = | growth rate |
| P0 = | D1 / (Ke - g) |
| 18.92 = | 1.92962 / (Ke- 7.8%) |
| Ke - 7.8% = | 1.92962 / 18.92 |
| Ke - 7.8% = | 10.20% |
| Ke = | 18.00% |
| D1 = | D0* (1 + g) |
| D1 = | 1.79* (1 + 7.8%) |
| D1 = | 1.92962 |
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