Computed cost of equity-long residual perpetuity model

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Reference no: EM13922231

Old Reliable Manufacturing Company's stock has a market price of $10.50 per share and the market’s assessment of its steady state return on equity is 12% per year. Assume its book value is expected to grow at 5 percent per year indefinitely, and the current book value per share is $15.00? The computed cost of equity is: Long residual perpetuity model

a. 9% b. 11% c. 13% d. 15% e. 17%

Reference no: EM13922231

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