CEO of Harding Media Incas 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 retained 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:
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