Dear Sir,
I am working on McTee question. In part b, when we look at the right issue, the cost of equity is 22.2(1.04)/302 + 0.04 = 11.6%. What is the 0.04 in this calculation? i can not find this 0.04 in the question. Please advise.
Thanks,
DT
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McTee (6/05)
10y ago#1It is the dividend growth formula, and the dividend growth rate is 4% (0.04).
It is given in the question in the paragraph following after the Statement of financial position.
in calculation of Cost of 80 SFrm loan through IRR...why interest rate is doubled as 2.5 + 2.3...what is concept behind this???
9y ago#3The interest rate is not doubled at all!
Note (d) of the question says that the interest is 2.5% plus an additional 2.3% when swapped (and the word 'additional' is printed in bold letters.)
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