Assume the current selling price of a firm’s stock is: $72. Using the Excel file Dividend Data, compute the firm’s annualized cost of equity using the Gordon dividend model.

 

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A 1 Dividend Data 2 3 Dividend Semi-Annual Period 4 per share 1 0.160 2 0.165 0.170 8. 0.176 9. 0.181 10 0.191 11 7 0.210 12 0.215 13 0.227 14 10 0.230 15 11 0.240 16 12 0.248 17 13 0.256 18 14 0.275 19 15 0.284 20 16 0.297 21 17 0.303 22 18 0.321 23 19 0.342 24 20 0.355 25 21 0.364 26 22 0.378 27 67 A 1 Dividend Data 2 3 Dividend Semi-Annual Period 4 per share 1 0.160 2 0.165 0.170 8. 0.176 9. 0.181 10 0.191 11 7 0.210 12 0.215 13 0.227 14 10 0.230 15 11 0.240 16 12 0.248 17 13 0.256 18 14 0.275 19 15 0.284 20 16 0.297 21 17 0.303 22 18 0.321 23 19 0.342 24 20 0.355 25 21 0.364 26 22 0.378 27 67

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