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Gremlin Industries will pay a dividend of $ 1.70 per share this year. It is expected that this dividend will grow by 7​% per year each year in the future. The current price of​ Gremlin's stock is $ 22.50 per share. What is​ Gremlin's equity cost of​ capital?

Respuesta :

Karabo99

Answer:

Gremlin's equity cost of​ capital is 14.56%

Explanation:

Gremlin's equity cost of​ capital = (D1 / P0) + g  

                                                    = ($1.70/$22.50) + 0.07

                                                    = 0.1456 or 14.56%

Therefore, Gremlin's equity cost of​ capital is 14.56%

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