alleryStart learning →A share trades at Rs 80, next dividend is Rs 4 and growth is 6 percent. What cost of equity does the Gordon model imply?
A6%
B5%
C9%
D11%
Answer & Solution
Correct answer: D. 11%
Cost of equity = D1 / P + g = 4 / 80 + 6% = 5% + 6% = 11%.
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