Gremlin equity cost of capital


Problem:

Gremlin Industries will pay a dividend of $1.80 per share this year. It is expected that this dividend will grow by 4% per year each year in the future. The current price of Gremlin's stock is $22.40 per share.

Required:

Question: What is Gremlin's equity cost of capital?

A) 11%

B) 12%

C) 14%

D) 18%

Note: Please show guided help with steps and answer.

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Accounting Basics: Gremlin equity cost of capital
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