Gremlin Industries Will Pay a Dividend of $1

question 28

Multiple Choice

Gremlin Industries will pay a dividend of $1.80 per share this year.It is expected that this dividend will grow by 4% per year each year in the future.The current price of Gremlin's stock is $22.40 per share.What is Gremlin's equity cost of capital?

• A)11%
• B)12%
• C)14%
• D)16%

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Definitions:

Machine Purchase

The acquisition of industrial or office machinery, usually considered a long-term investment in assets.

Extraordinary Repair

Major repairs extending the useful life of an asset far beyond the normal maintenance.

Betterment

The act of improving or increasing the value of an asset or property through enhancements or upgrades.

Capital Expenditure

Financial resources deployed by a business to buy or enhance tangible assets like real estate, factories, or machinery.