D1 = $2.25,Po=$22.00, growth =5% What is its cost of common equity and its WACC?
D1 = $2.25,Po=$22.00, growth =5% What is its cost of common equity and its WACC?
Homework Answers
The cost of common equity is:
As per the dividend discount model:
Re = D1/PO + G
Where, Re = required return on equity
G= growth rate
Po= current share price
= $2.25/22 + 0.05
=15.23%
WACC:
weight of equity *cost of equity+ weight of debt*cost of debt
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D1 = $2.25,Po=$22.00, growth =5% What is its cost of common
equity and its WACC?
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