S.Bouchard and Company hired you as a consultant to help estimate its cost of capital.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 equity 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%

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The Answer of S.Bouchard and Company hired you as a consultant to help estimate its cost of capital.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 equity 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%

SBouchard and Company Hired You as a Consultant to Help