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Question
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings?a. 10.69%
b. 11.25%
c. 11.84%
d. 12.43%
e. 13.05%
Answer
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