which one of the following statements is correct related to the dividend growth

Question

which one of the following statements is correct related to the dividend growth model aproach to compting the cost of equity?

A. the Rate of growth must exceed the reqired rate of return

B. the rate of retunr must be adjusted for taxes.

c.The cost of equilty is equal to the return on the stock plus the rick-free rate.

D. The cost of equity is equal to the return on the stock mutliplied by the stock's beta

E. The annual dividend used in the computation must be for year one if you are using today's
stock price to compute the return.

Explanation / Answer

Tha annual dividend used in the computation must be for the year one if you are using todays stock price to compute the return

P0 using dividend growth model

P0 = D1/Ke-G

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.