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ABC corp has a stock price of $20.Its expected next dividend is $1 per share.Dividends are...

ABC corp has a stock price of $20.Its expected next dividend is $1 per share.Dividends are expected to grow at 3% per year.Using the Cash Flow Model , calculate the cost of Equity capital for ABC Corp?

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Answer #1

Cost of equity using the cash flow model:-

=Expected dividend/stock price+growth rate

=1/20+3%

=8.00%

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