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Question
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. (Compute answer to the nearest 0.1%).
a. 12.3%
b. 13.4%
c. 13.0%
d. 12.7%
Answer
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