Answer:
15.22%
Explanation:
The computation of the cost of equity is shown below:
Required return on assets = Weightage of debt × pre tax cost of debt + weightage of equity × cost of equity
where,
Weightage of debt is
= (Debt) ÷ (Debt + Equity)
= (0.64) ÷ (0.64 + 1)
= 0.39
And, the weightage of equity is
= (Equity) ÷ (Debt + Equity)
= (1) ÷ (0.64 + 1)
= 0.61
Now the cost of equity is
12.6% = 0.39 × 8.5% + 0.61 × cost of equity
12.6% = 3.315% + 0.61 × cost of equity
So, the cost of equity is 15.22%
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I am not sure tho
Answer:
At a growth rate of 1%, price of share $2.78
At a growth rate of 3%, price of share $3.57
At a growth rate of 5%, price of share $5.00
At a growth rate of 7%, price of share $8.33
At a growth rate of 9%, price of share $25.00
Explanation:
The formula for computing share price at each growth rate is dividend/(rate of return-growth rate) as shown in the attached spreadsheet.
Note that the higher the dividend growth rate the higher the share price as share price was at the highest at a growth rate of 9%
Is better to pay in full the credit bill so that when you need to help in the long run you can be able to pay and halfway payments