An All-Equity Firm Had a Dividend Expense of $20,000 Last

question 92

Multiple Choice

An all-equity firm had a dividend expense of $20,000 last year. The market value of the firm is $600,000 and the dividend is expected to increase at 5% each year. What is the cost of equity for this firm?

• A) 6.80%
• B) 7.65%
• C) 8.50%
• D) 9.35%

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Definitions:

Gardner's Theory

A theory of multiple intelligences proposed by Howard Gardner, suggesting people have different kinds of intelligences, such as linguistic, logical-mathematical, and spatial.

Spearman's Theory

A theory of intelligence proposing that general intelligence (g factor) underlies all cognitive abilities, thus explaining overall performance on mental ability tests.

Multiple Intelligences

A theory suggesting that intelligence is composed of various distinct types, each one relating to a specific cognitive capacity.

"g" Factor

A theoretical construct suggesting that a general intelligence factor underlies specific cognitive abilities.