Chapter 9

Next, the firm's cost of new common stock can be determined from the DCF approach for the cost of equity. ke = D1/[P0(1 - F)] + g. ke = $2.3375/[$46.75(1 - 0.05)] + 0.12. ke = 17.26%. 9-13 a. Examining the DCF approach to the cost of retained earnings, the expected growth rate can be determined from the cost of common equity, price, and ... ................
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