Multiple Choice
The CEO of Harding Media Inc.as asked you to help estimate its cost of common equity.You have obtained the following data: D0 = $0.85; P0 = $22.00; and g = 6.00% (constant) .The CEO thinks,however,that the stock price is temporarily depressed,and that it will soon rise to $40.00.Based on the DCF approach,by how much would the cost of common from reinvested earnings change if the stock price changes as the CEO expects?
A) −1.49%
B) −1.66%
C) −1.84%
D) −2.03%
E) −2.23%
Correct Answer:
Verified
Correct Answer:
Verified
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