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Assume that you are a consultant to Lotte Inc., and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 7.00% (constant). What is the cost of equity from retained earnings based on the DCF approach? 11.12% 10.87% 10.32% 9.44% 9.15%

Respuesta :

The cost of equity from retained earnings based on the DCF approach=9.44%

Explanation:

  • The cost of equity from retained earnings based on the DCF approach can be calculated as follows,
  • For D1  = $0.67
  • For P0 = $27.50
  • For  g = 7.00%
  • Therefore, rs = [tex]\frac{D1}{PO}[/tex] + g
  • The answer is =9.44%

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