Question: 5. Chapter MC, Section .09, Problem 040 The CEO of Harding Media Inc. as asked you to help estimate its cost of common equity. You
5. Chapter MC, Section .09, Problem 040 The CEO of Harding Media Inc. as asked you to help estimate its cost of common equity. You have obtained the following data: Do = $0.85; Po= $22.00; and g = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common from reinvested earnings change if the stock price changes as the CEO expects? Oa. -2.03% Ob. -1.66% Oc. -1.84% Od. -1.49% Oe. -2.23%
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