Gremlin Industries will pay a dividend of $ 1.35 per share this year. It is expected that this dividend will grow by 5%...
Gremlin Industries will pay a dividend of $ 1.35 per share this year. It is expected that this dividend will grow by 5% per year each year in the future. The current price of Gremlin's stock is $ 23.20 per share. What is Gremlin's equity cost of capital?
Can someone explain this please
Homework Answers
![Price = D1/(ke-g) = $23.20 D1 = $1.35 5.00% ke-g = 5.82% (1.35/23.2] Cost of equity = ke 10.82% [5% + 5.82% ]](http://img.homeworklib.com/questions/31819fd0-05c2-11ea-8e98-01ff4105e57b.png?x-oss-process=image/resize,w_560)
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