Abc co. is expecting to pay a dividend of $1.98 in the upcoming year and further anticipates growing the dividend at a constant rate of 3.5% per year, indefinitely. if the current share price is $25, then what is the cost of equity according to the gordon growth model?

0.1142 or 11.42%

Explanation:

In this question, we apply the Gordon Growth model which is presented below:

= (Current year dividend ÷ current share price) + Growth rate

= ($1.98 ÷ $25) + 3.5%

= 0.0792 + 0.035

= 0.1142 or 11.42%

We simply applied the above formula to find out the cost of equity by considering the current year dividend, current share price ,and the growth rate

x=3

step-by-step explanation:

this is really simple i saw that there was only one term (5x) and thought if that was 15 what would i have to multiply everything else to get it there? well if 5x became 15 then x would have to be 3 so plug the 3 in the x for the other equations and you get 15 for the other ones. so there you go. : )

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