- A firm`s present market price of the share is Rs 40 and its EPS is Rs 12. The firm is planning to declare 45% of this as dividends. If the firm reinvests its retained earnings at the rate of 14%, the cost of its equity according to Gordon dividend capitalization model is:    

a)   20%                        

b)   21.20%                        

c)   22%                        

d)   26.20%

Answer rating: 100% (QA)

market prices of shares 40 EPS12 Dividend p... View the full answer