The CEO of Harding Media Inc. as asked you to help estimate its cost of common equity. You have obtained the following data: D0 = $0.85; P0 = $22.00; and gL = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the dividend growth model, by how much would the cost of common from reinvested earnings change if the stock price changes as the CEO expects?
A. ?1.49%
B. ?1.66%
C. ?1.84%
D. ?2.03%
E. ?2.23%
Answer: C
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A. strategic equivalence B. substitution C. direct imitation D. innovation
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What will be an ideal response?
If bonds are issued at a premium, the bond issuer will pay the bondholders an amount lower than the issue price at maturity.
Answer the following statement true (T) or false (F)