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Using the Constant Growth Model, a Firm's Expected (D1) Dividend

Question 65

Multiple Choice

Using the constant growth model, a firm's expected (D1) dividend yield is 4% of the stock price, and its growth rate is 5%. If the tax rate is .35%, what is the firm's cost of equity?


A) 10%
B) 6.65%
C) 9.0%
D) More information is required

Correct Answer:

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