The Following Financial Information Is Available on Rawls Manufacturing Company

question 94

Multiple Choice

The following financial information is available on Rawls Manufacturing Company:
Current per share market price $48.00
Current (t = 0) per share dividend $3.50
Expected long-term growth rate 5.0%
Rawls can issue new common stock to net the company $44 per share.Determine the cost of internal equity capital using the dividend capitalization model approach.(Compute answer to the nearest 0.1%.)

• A)12.3%
• B)13.4%
• C)13.0%
• D)12.7%

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Definitions:

Arbitrary

Based on random choice or personal whim, rather than any reason or system.

Continuous Data

Data that can take on any value within a given range, as opposed to discrete data which can only take on specific values.

Equal Space

The provision or allocation of the same amount of physical or metaphorical room to different parties, ideas, or entities.

Central Tendency

Central tendency refers to a central value or a typical value for a probability distribution. It is a measure that attempts to describe a set of data by identifying the central position within that set of data. The most common measures of central tendency are the mean, median, and mode.