Carla Vista Wok Co. is expected to pay a dividend of $1.20 one year from today...
Carla Vista Wok Co. is expected to pay a dividend of $1.20 one year from today on its common shares. That dividend is expected to increase by 5.00 percent every year thereafter. If the price of Carla Vista common stock is $8.00, what is the cost of its common equity capital?
Homework Answers
cost of common equity capital=(D1/Current price)+Growth rate
=(1.2/8)+0.05
which is equal to
=20%
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