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PSYCHO15rus [73]
3 years ago
15

The Drogon Co. just issued a dividend of $3.00 per share on its common stock. The company is expected to maintain a constant 6.2

percent growth rate in its dividends indefinitely. If the stock sells for $60 a share, what is the company’s cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places.
Business
1 answer:
Mars2501 [29]3 years ago
5 0

Answer:

The company’s cost of equity is 11.51%.

Explanation:

Please find the below for detailed explanations and calculations:

The company's cost of equity need to be found is the discounted rate that will bring net present value of its projected future dividend to its current stock price.

Denote cost of equity need to be found is x.

We apply the formula to calculated the present value of growing perpetuity to find x as shown below:

[ 3 x ( 1+0.062) ] / ( x - 0.062) = 60 <=> 3.186 / ( x - 0.062) = 60 <=> x = 11.51%.

Thus, the company's cost of equity is 11.51%.

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Appliances multiple choice 1 convenience shopping specialty unsought 2. Automobile battery jumpstart services multiple choice 2
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The question wants us to group the types of shopping in to different categories

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<h3>What are specialty goods?</h3>

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<h3>What are unsought goods?</h3>

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5 0
1 year ago
The price of beef rises significantly, what will happen in the market for fast-food hamburgers assuming nothing else happens in
romanna [79]

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Option (c) is correct.

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2 years ago
A company produces fruit juice in five different flavors (Mango,Guava,Apple,Grape and Tropical). A local supermarket sells the p
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Answer:

3 ÷ 5

Explanation:

Data provided in the question according to the question is as follows

There are five different flavors like Mango, Guava, Apple, Grape, and Tropical = 5

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= 3 ÷ 5

Hence, the answer is 3 ÷ 5

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2 years ago
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