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Amanda [17]
3 years ago
7

IBM expects to pay a dividend of $2 next year and expects these dividends to grow at 6​% a year. The price of IBM is $90 per sha

re. What is​ IBM's cost of equity​ capital?
Business
1 answer:
Elena-2011 [213]3 years ago
7 0

Answer:

Cost of equity = 8.22%

Explanation:

Cost of equity = Dividend per share /current market value + growth rate of dividend  

Cost of equity = 2/90 + 6%

Cost of equity = 0.0222 + 6%

Cost of equity =0.0222 + 0.06

Cost of equity = 0.0822

Cost of equity = 8.22%

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