To Help Estimate Its Cost of Common Equity,Maxwell and Associates

question 74

Multiple Choice

To help estimate its cost of common equity,Maxwell and Associates recently hired you.You have obtained the following data: D₀ = $0.90; P₀ = $27.50; and g = 7.00% (constant) .Based on the DCF approach,what is the cost of common from reinvested earnings?

• A) 9.29%
• B) 9.68%
• C) 10.08%
• D) 10.50%
• E) 10.92%