Will Co Is Expected to Pay a Dividend of $2 Per

question 33

Multiple Choice

Will Co. is expected to pay a dividend of $2 per share at the end of year 1(Div₁) , and the dividends are expected to grow at a constant rate of 4 percent forever. If the current price of the stock is $20 per share, calculate the expected return or the cost of equity capital for the firm.

• A)10 percent
• B)4 percent
• C)14 percent
• D)20 percent

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