Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Summerdahl Resort's common stock is currently trading at $36 a share
Summerdahl Resort's common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1? = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity?
Computation of the cost of common equity:-
Cost of common equity = (D1 / Current selling price) + Growth rate
= ($3 / $36) + 5%
= 8.33% + 5%
= 13.33%
