What is jrn cost of equity capital

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Reference no: EM132417182

Problem: JRN Enterprises just announced that it plans to cut its dividend for the next year from £3.00 to £1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow indefinitely at 4% per year and JRN's stock was trading at £25.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assume that JRN's risk is unchanged by the expansion.

Required:

(a) What is JRN's cost of equity capital?

Reference no: EM132417182

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