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judy's boutique just paid an annual dividend of $3.43 on its common stock. the firm increases its dividend by 3.65 percent annually. what is the company's cost of equity if the current stock price is $42.76 per share? multiple choice 11.35% 11.02% 11.67% 11.96% 12.38%

Respuesta :

The company's cost of equity if the current stock price is $42.76 per share is 11.96%.

What is cost of equity?

It represents the compensation that the market demands in exchange for owning the asset and bearing the risk of ownership.

How to calculate cost of equity?

Cost of equity = (dividends per share / current market value of stock) + growth rate of dividends

Now, let's calculate using the formula to get the answer
= ((3.43*(1+0.0365)/42.76) + 0.0365
= (3.55195 / 42.76) + 0.0365
= 0.11964301
= 11.96% (rounded)

So judy's boutique cost of equity is 11.96%

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