QT's common stock is currently selling for $66 a share and the firm just paid an...
QT's common stock is currently selling for $66 a share and the firm just paid an annual dividend of $3.00 per share. Management believes that dividends and earnings should grow at 9% annually. Based on this, and a marginal tax rate of 34%, what is the cost of common stock (also known as the cost of retained earnings)?
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13.95% |
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9.43% |
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14.28% |
||
|
9.21% |
Homework Answers
Cost of common stock=(D1/Current price)+Growth rate
=(3*1.09)/66+0.09
which is equal to
=13.95%(Approx).
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