National Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital...

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National Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital of 9%. The firm is growing at a constant rate and does not issue any preferred shares. The after-tax cost of debt is determined at 9%. The expected dividend to be declared by National Co. is P2 and growth rate is 1%. How much is the current price of the ordinary share?* [ National Co., a company with a 25% debt-to-equity ratio, has a weighted average cost of capital of 9%. The firm is growing at a constant rate and does not issue any preferred shares. The after-tax cost of debt is determined at 9%. The expected dividend to be declared by National Co. is P2 and growth rate is 1%. How much is the current price of the ordinary share?* [

Answer rating: 100% (QA)

To find the current price of the ordinary share we can use the Gordon Growth Model also ... View the full answer