Constant dividend growth valuation model

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Reference no: EM13826227

The following financial information is available on Global Enterprises:

Current per share market price: $12.25

Current (t = 0) per share dividend: $2.00

Expected long-term growth rate: 9.5%

Global can issue new common stock to net the company $10.50 per share. Determine the cost of external equity capital using the dividend capitalization model approach (i.e., constant dividend growth valuation model).

A. 30.36%

B. 28.55%

C. 27.38%

D. 25.83%

Reference no: EM13826227

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