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Question
To help estimate its cost of common equity, Maxwell and Associates recently hired you. You have obtained the following data: D0 = $0.90; P0 = $27.50; and gL = 7.00% (constant). Based on thedividend growthmodel, what is the cost of common from reinvested earnings?a. 9.29%
b. 9.68%
c. 10.08%
d. 10.50%
e. 10.92%
Answer
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