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%

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Definitions:

Easement Appurtenant

A right for the benefit of one piece of land (dominant estate) that allows access or use of a neighboring land (servient estate).

New Owner

The individual or entity that acquires ownership or property rights in something, such as real estate or a company, often through purchase or transfer.

Land

The part of the earth's surface that is not covered by water, including any buildings, crops, or natural resources upon it, which can be owned or used.

Easement in Gross

A legal right to use another person's land for a specific, limited purpose, which is not tied to any particular piece of property.