The Cost of Equity: Oasis Ltd Has Common Shares with a Price

question 46

Multiple Choice

The cost of equity: Oasis Ltd has common shares with a price of $21.12 per share. The company is expected to pay a dividend of $1.75 one year from today, and dividends are expected to grow at 10 percent for two years after that and then at 5 percent thereafter. What is the implied cost of ordinary shares for Oasis?

• A) 13%
• B) 14%
• C) 15%
• D) 16%

---

Definitions:

Components

The distinct parts or elements that make up a whole system, machine, or assembly.

Ongoing Learning

The consistent and continual process of gaining new knowledge or skills throughout one's life or career.

Clients

Individuals or organizations that use the professional services or advice of another person or group.

Legitimate Power

Authority that is recognized and accepted by others within an organizational or societal structure, typically granted through a formal role or position.