Slow 'n Steady, Inc., has a stock price of $ 28, will pay a dividend next...
Homework Answers
question 1:
As per Gordon Growth Model of Stock Valuation:
P=D1/(Ke-g)
P= price of share. $28
D1= expected next year dividend dividend $3.05
g= Growth rate 1.2% or 0.012
Ke= cost of equity capital
28= 3.05/(Ke-0.012)
Ke= (3.05/28)+0.012
Ke=0.1209
Ke=12.09%
Cost of equity capital of slow n steady Inc is 12.09%
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