SBouchard and Company Hired You as a Consultant to Help

question 73

Multiple Choice

S.Bouchard and Company hired you as a consultant to help estimate its cost of capital.You have obtained the following data: D₀ = $0.85;P₀ = $22.00;and g = 6.00% (constant) .The CEO thinks,however,that the stock price is temporarily depressed,and that it will soon rise to $34.00.Based on the DCF approach,by how much would the cost of equity from retained earnings change if the stock price changes as the CEO expects? Do not round your intermediate calculations.

• A) -1.45%
• B) -1.72%
• C) -1.11%
• D) -1.40%
• E) -1.36%

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Definitions:

Buttocks

The two rounded portions of the anatomy, located on the posterior of the pelvic region in humans and many other primates.

Cervix

The lower, narrow end of the uterus that opens into the vagina, playing a key role in childbirth and menstruation.

Birth Process

The series of physiological events leading to the delivery of a newborn.

Transition

The initial movement of the head of the fetus into the birth canal.