Determine firm cost of equity


Problem:

Deltronics just paid its first annual dividend of $0.25 a share. The firm plans to increase the dividend by 3.5 percent per year indefinitely.

Required:

Question 1: What is the firm's cost of equity if the current stock price is $12.60 a share?

Note: Provide support for your rationale.

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Finance Basics: Determine firm cost of equity
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