The Shoe Outlet has paid annual dividends of $0.80, $0.85, $1.05, $1.25, and $1.50 per share
over the last five years, respectively. The stock is currently selling for $56.23 a share. What is
the cost of equity?
Growth rate 1=(.85-.80)/.80=6.25%
Growth rate 1=(1.05-.85)/.85=23.53%
Growth rate 1=(1.25-1.05)/1.05=19.05%
Growth rate 1=(1.50-1.25)/1.25=20.00%
Growth Rate =(6.25%+23.53%+19.05%+20%)/4=17.21%
cost of equity =D1/Selling Price+growth
=(1.50*(1+17.21%))/56.23+17.21%
cost of equity=20.34%
The Shoe Outlet has paid annual dividends of $0.80, $0.85, $1.05, $1.25, and $1.50 per share...
The Shoe Outlet has paid annual dividends of $0.80, $0.85, $1.05, $1.25, and $1.50 per share over the last five years, respectively. The stock is currently selling for $56.23 a share. What is the cost of equity? =20.33% Please check the answers and show all work typed out. No excel or grid style please as I am on mobile.
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