Mackenzie Company has a price of $36 and will issue a dividend of $2 next year. It

Question:

Mackenzie Company has a price of $36 and will issue a of $2 next year. It has a beta of 1.2, the risk-free rate is 5.5%, and it estimates the market risk premium to be 5%.
a. Estimate the equity for Mackenzie.
b. Under the CGDM, at what rate do you need to expect Mackenzie’s dividends to grow to get the same equity as in part (a)?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...