%80% ii) Sun 8:29 AM a E mathxl.com Fin320_F1713 Test: Valuation Exam Time Remai

Question

%80% ii) Sun 8:29 AM a E mathxl.com Fin320_F1713 Test: Valuation Exam Time Remaining: 01:00:55 Submit Test This Question: 1 pt 30125 (3 complete) This Test: 25 pts possible Jumbuck Exploration has a current stock price of $2.15 and is expected to sell for $2.26 in one year's time, immediately after it pays a dividend of $0.28. Which of the following is closest to Jumbuck Exploration's equity cost of capital? A. 22.68% B. 10.88% OC. 18.14% 0 D. 9.0796 Click to select your answer pa did not ook Air

Explanation / Answer

Current price of the share = [ Price after one Year + Dividend after one year ] / ( 1 + Ke)  

2.15 = [ 2.26 + 0.28 ] / ( 1+ Ke)

1 + Ke = 2.54 / 2.15 =  1.1814

Ke = 18.14 %................final answer = Option - C

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