Answer:
-2.23%
Explanation:
The formula to compute the cost of common equity under the DCF method is shown below:
= Current year dividend ÷ price + Growth rate
In first case,
The current dividend would be
= $0.85 + $0.85 × 5%
= $0.85 + $0.0425
= $0.8925
The other things would remain the same
So, the cost of common equity would be
= $0.8925 ÷ $20 + 5%
= 0.044625 + 0.05
= 9.46%
In second case,
The price would be $40
The other things would remain the same
So, the cost of common equity would be
= $0.8925 ÷ $40 + 5%
= 0.0223125 + 0.05
= 7.23%
The difference would be
= 7.23% - 9.46%
= -2.23%
Answer:
C. Personal Reference introduction
Explanation:
This introduction type talks about a subject (State University) by relating the speaker or his experience to the subject.
(A) Quotation is something that is being said by someone. So whether or not this speaker related himself to the university, what he said would still have been taken as a quote or would be put in quotation marks when written down.
(B) A Rhetorical Question is one which is asked without the intent of getting an answer. First of all, there is no question in this speaker's speech.
(D) "Story" would have been the answer if there was no option (C) but the fact that option C exists and more perfectly describes his speech, makes (D) refutable.
Answer:
The appropriate answer is "13.82%".
Explanation:
Given:
Risk free rate,
Beta of stock,
Market rate,
= 
Now,
The market risk premium will be:
⇒ 
= 
= 
= 
(%)
hence,
The cost of equity will be:
⇒ 
(%)
