Duke Energy has been paying dividends steadily for 20 years. During that time, dividends have grown at a compound annual rate of
33%.
If Duke Energy's current stock price is
$85
and the firm plans to pay a dividend of
$5.40
next year, what is Duke's cost of common stock
equity?
cost of common stock equity=(D1/Current price)+Growth rate
=(5.4/85)+0.33
which is equal to
=39.35%(Approx).
Duke Energy has been paying dividends steadily for 20 years. During that time, dividends have grown...
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