To Help Them Estimate the Company's Cost of Capital,Smithco Has

question 89

Multiple Choice

To help them estimate the company's cost of capital,Smithco has hired you as a consultant.You have been provided with the following data: D₁ = $1.45; P₀ = $22.50; and g = 6.50% (constant) .Based on the DCF approach,what is the cost of common from reinvested earnings?

• A) 11.10%
• B) 11.68%
• C) 12.30%
• D) 12.94%
• E) 13.59%

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Marcia

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