Klister Corporation currently pays dividends of $2.75.The current market price of one share in Klister Corporation is $38.If the growth rate is thought to be 7.5%,what is the implied cost of equity capital?

Question

Quizplus · Accepted Answer

Rearranging equation 11.9,we can obtain the implied cost of equity capital in the following way: k_e = [2.75(1.075)/38] + 0.075 = 0.152 = 15.2%.

Klister Corporation Currently Pays Dividends of $2 7.2% 7.2 \% 7.2%

Klister Corporation Currently Pays Dividends of $2 $7.2 \%$