An All-Equity Firm Produced a Dividend Flow of $20,000 Last

question 108

Multiple Choice

An all-equity firm produced a dividend flow of $20,000 last year.The market value of the firm is $650,000 and the dividend is expected to increase at 4% each year.What is the cost of equity capital for this firm?

• A)5.5%
• B)6.2%
• C)7.2%
• D)7.8%

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Definitions:

Total Egocentrism

A cognitive state where an individual is unable to differentiate between their own perspective and that of others, typically seen in early childhood development.

Types of Memory

The various forms in which the human brain can store information, typically classified as sensory, short-term (or working), and long-term memory.

Habituation

A psychological learning process wherein there is a decrease in response to a stimulus after being repeatedly exposed to it.

Dishabituation

The renewal of response or attention to a stimulus after habituation has occurred, typically due to the introduction of a new or changed stimulus.