IBM Expects to Pay a Dividend of $3 Next Year

question 110

Multiple Choice

IBM expects to pay a dividend of $3 next year and expects these dividends to grow at 8% a year.The price of IBM is $95 per share.What is IBM's cost of equity capital?

• A)3.16%
• B)4.84%
• C)8%
• D)11.16%

---

Definitions:

Consumer Credit

A type of personal loan or credit extended to consumers for the purchase of goods and services, repayable in installments or at a later date.

Business Loans

Financial products offered by banks and financial institutions to companies for the purpose of funding operations, expansions, or investments.

Commercial Loans

Commercial loans are debt-based funding agreements between businesses and financial institutions, used primarily for business purposes.

Truth In Lending Act

Legislation at the national level that facilitates educated decisions about consumer credit use by demanding information on its terms and fees be made available.