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ad-work [718]
3 years ago
15

A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming y

ear. The growth rate in dividends has been 5 percent. The cost of the firm's common stock equity is ________.
Business
1 answer:
Alisiya [41]3 years ago
4 0

Answer: 13%

Explanation: The cost of equity can be defined as the return a company pays to its shareholders in return of bearing the risk of investing in the company.

As per the given figures in the question we can say that cost of equity can be determined with the help of dividend discount model, which can be equated as follows :-

k_{e}= \frac{D1}{P0}+G

where,

ke = cost of equity

D1 = expected dividend

P0 = current price

G = growth rate

So, putting the values into equation we get :-

k_{e}= \frac{\$2}{\$25}+5\%

               = 13%

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pychu [463]

Money is omitted in a barter transaction.In a barter transaction, two parties trade one basket of goods and services for another basket containing additional goods and services.

<h3>What is barter transaction?</h3>
  • A barter transaction entails two parties and involves the exchange of one basket of products and services for another basket including other commodities and services. without a related monetary payment.
  • In the alternative trading system of barter, products and services are traded directly for one another without the use of money as a middleman. For instance, a farmer may trade a pair of shoes from a shoemaker for a bushel of wheat.
  • Several different kinds of barter exchanges are briefly described and explained here.
  • Direct bartering is the direct exchange of goods or services between two or more parties.
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1 year ago
The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, t
Volgvan

Answer:

b. Less is produced

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The Principle of diminishing returns to capital states that as more unit of capital is  added, a point will be reached where a decline in the marginal product will be encountered.

This simply means that for every additional unit of capital invested in the business, a less than proportionate increase is seen, this simply means that there will be a decrease in marginal productivity.

5 0
3 years ago
O'brien inc. has the following data: rrf = 5.00%; rpm = 6.00%; and b =+0.70. what is the firm's cost of equity from retained ear
algol13

The company's cost of equity is0.92 % of retained earnings according to the capm.

The cost of equity for a corporation is the amount that the market is willing to pay to own an asset and take on ownership risk. The two common methods for determining the cost of equity are the capital asset pricing model and dividend capitalization model. On the right side of the balance sheet, you can see a list of the company's debt and equity accounts. The cost of capital refers to the price a business must pay to finance its operations through debt, equity, or a mix of the two.

b = 0.70, rs = rRF + b(RPM), and rRF + b(RPM) =5.00% RPM6.00% were lent to us.

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1 year ago
How do you manage a business?:​
goldenfox [79]
Business management definition is managing the coordination and organization of business activities Management is in charge of planning, organizing, directing, and controlling the business's resources so they can meet the objectives of the policy.
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3 years ago
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Joseph is an unemployed yard landscaping worker who is trying to find employment as he last had work seven months ago. He is now
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Answer:

Cyclical Unemployment

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