XYZ Company Issues Common Stock That Is Expected to Pay

question 11

Multiple Choice

XYZ Company issues common stock that is expected to pay a dividend over the next year of $4 at a price of $25 per share.If its expected growth rate is 5%,what is XYZ's cost of common equity?

• A) 9.0%
• B) 11.0%
• C) 16.0%
• D) 21.0%

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