Using the dividend capitalization model approach

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Reference no: EM131043541

The following financial information is available on Rawls Manufacturing Company:

Current per share market price $48.00

Current (t=0) per share dividend $3.50

Expected long-term growth rate 5.0%

Rawls can issue new common stock to net the company $44 per share. Determine the cost of internal equity capital using the dividend capitalization model approach. (comput the answer to the nearest 0.1%)

Reference no: EM131043541

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