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Determine the cost of internal equity capital

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Reference no: EM133123515

Question - The following financial information is available on Rawls Manufacturing Company:

Current (t=0) market price of common shares: $48.00

Current (t=0) dividend per share: $3.50

Current dividends are expected to grow at a rate of 10% per year over the next 4 years and 6% annually thereafter.

Determine the cost of internal equity capital using the dividend capitalization model approach.

Reference no: EM133123515

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