An All-Equity Firm Produced a Dividend Flow of $40,000 Last

question 62

Multiple Choice

An all-equity firm produced a dividend flow of $40,000 last year.The market value of the firm is $800,000 and the dividend is expected to increase at 5% each year.What is the cost of equity capital for this firm?

• A)9.18%
• B)9.75%
• C)10.25%
• D)11.89%

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Definitions:

Fava Beans

A type of legume that is cultivated for its large, edible seeds, enjoyed in many cuisines around the world for their nutritional value.

Peanuts

A type of legume native to South America, valued for its edible seeds.

Soybeans

A species of legume native to East Asia, widely grown for its edible bean which has numerous uses, including oil and protein-rich food products.

Biological Selection

The process through which certain traits become more or less common in a population due to their effects on the survival and reproduction of their bearers.