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As the Assistant to the CFO of Johnstone Inc

Question 27

Multiple Choice

As the assistant to the CFO of Johnstone Inc.,you must estimate its cost of common equity.You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant) .Based on the DCF approach,what is the cost of common from reinvested earnings?


A) 10.69%
B) 11.25%
C) 11.84%
D) 12.43%
E) 13.05%

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