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Calculate the cost of ordinary equity for the company

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Reference no: EM133182512

Question - Khan Ltd's ordinary shares current market price is $36 per share. The company believes that its shares should really be worth $25 per share in current market. Assume company just paid an annual dividend of $5 per share and dividends is expected to improve by 7 per cent per year infinitely and market is fully aware of this. Calculate the cost of ordinary equity for the company which it believes is most appropriate.

Reference no: EM133182512

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