Highgrowth company has a stock price of $ 23. the firm will pay a dividend next year of $ 1.19, and its dividend is expected to grow at a rate of 3.7 % per year thereafter. what is your estimate of highgrowth's cost of equity capital? the required return (cost of capital) of levered equity is nothing%

Cost of equity = 8.87%

Explanation:

Given that,

Stock price = $23

Firm will pay a dividend next year = $1.19

Dividend is expected to grow at a rate = 3.7 % per year thereafter

cost of equity = (Dividend next year ÷ Stock price) ÷ Dividend growth rate

cost of equity = ($1.19 ÷ $23) + 3.7%

cost of equity = 5.17% + 3.7%

cost of equity = 8.87%

anjan should should report alteast 5000 on the first apyment and 10,000 each year

explanation:

answer; comparing the additional benefits and costs;