HighGrowth Company has a stock price of $22. The firm will pay a dividend next year of $0.97, and its dividend is expected to grow at a rate of 3.7% per year thereafter. What is your estimate of HighGrowth's cost of equity capital?

HighGrowth Company has a stock price of $22. The firm will pay a dividend next year of $0.97, and its dividend is expected to grow at a rate of 3.7% per year thereafter. What is your estimate of HighGrowth's cost of equity capital?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 16MC

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HighGrowth Company has a stock price of $22.
The firm will pay a dividend next year of $0.97,
and its dividend is expected to grow at a rate of
3.7% per year thereafter. What is your estimate
of HighGrowth's cost of equity capital?

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