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Forums › ACCA Forums › ACCA FM Financial Management Forums › Please tell me how the answer could be 13%?
The market value of Delta’s shares are $2 and the last dividend paid was 25c. The annual growth rate of dividends is expected to be 5%. What is the cost of equity capital?
I answered it as
25(1.05)/200+0.05= 18.25%
The issue is Po-g therefore should be 200-5%…try again with this and this should give you 13%
Thank you kipudge.
Got it now, 25/190 = 13%
