Question

If ABC corporation paid a dividend of $6 per share last year. The stock currently sells for $80 per share. You estimate that the dividend will grow steadily at a rate of 6% per year into the indefinite future. What is the cost of equity

Answer 1

The cost of equity is 13.95%.

What is stock?

• Stock (sometimes known as capital stock) in the financial industry refers to the shares into which ownership of a corporation or company is divided.
• A single share of stock represents a fractional ownership interest in the company based on the total number of shares.
• The shareholder (stockholder) will then typically be entitled to that portion of the company's earnings, proceeds from the sale of company assets (after paying off all senior claims such as secured and unsecured debt), or voting rights, with these rights frequently being distributed in proportion to the amount of money each stockholder has invested.

What is Share?

• A share is a unit used in mutual funds, limited partnerships, and real estate investment trusts in the financial markets.
• Share capital is the collective term for an organization's shares.
• A shareholder (or stockholder) of a corporation is someone who owns shares in that company.
• A share is an undividendable piece of capital that expresses the shareholder's ownership of the company.

Learn more about Share here:

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