Assume that Kish Inc. hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $0.90; P0 = $47.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations.
A. 8.85%
B. 10.38%
C. 10.02%
D. 8.03%
E. 9.03%
Answer: E
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A. They often do not change the nature of competition in an industry. B. They occur when government regulations restrict the use of certain technologies. C. They have the potential to threaten the survival of established industries. D. They can often be handled by established companies without adopting new strategies. E. They strongly deter new entrants.
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Which of the following positive relationships is not supported with consistent results?
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A. Dell recalling laptops to correct manufacturing defects B. the American Red Cross promoting blood donation opportunities C. a local Chevrolet dealer providing the address of its new showroom D. Walmart advertising year-end discounts and clearance items E. Verizon promoting a new data plan with unlimited texting