The Following Financial Information Is Available on Rawls Manufacturing Company

question 171

Multiple Choice

The following financial information is available on Rawls Manufacturing Company: $\begin{array}{lr}\text {Current per share market price }&\$48.00\\\text { Most recent per share dividend }&\$3.50\\\text { Expected long-term growth rate}&5.0\%\\\end{array}$
Rawls can issue new common stock to net the company $44 per share. Determine the cost of retained earnings using the dividend growth model approach. (Compute answer to the nearest .1%) .

• A) 12.3%
• B) 13.4%
• C) 13.0%
• D) 12.7%