If the dividend growth model is used, the cost of equity depends on
1) the firm's earnings growth rate
2) the current dividend payment
3) the price of the stock
A)1 and 2
B)1 and 3
C)2 and 3
D)1, 2, and 3

Question

If the dividend growth model is used, the cost of equity depends on
​1) the firm's earnings growth rate
2) the current dividend payment
3) the price of the stock
A)​1 and 2
B)1 and 3​
C)2 and 3​
D)1, 2, and 3​

Quizplus · Accepted Answer

The dividend growth model calculates the cost of equity based on the current dividend payment, the price of the stock, and the firm's earnings growth rate, which influences future dividends.

If the Dividend Growth Model Is Used, the Cost of Equity