Rivoli inc. hired you as a consultant to estimate its cost of capital. you have been provided with the following data: d0 = $0.80; p0 = $57.50; and g = 8.00% (constant). based on the dcf approach, what is the cost of equity from retained earnings? do not round your intermediate calculations.
a. 7.98%
b. 11.02%
c. 10.17%
d. 10.07%
e. 9.50%

e. 9.50%

Explanation:

DCF formula for cost of equity =

r = (D1/P0) +g

D1 = Next year's dividend = D0(1+g) = 0.80(1.08) = 0.864

P0 = Current stock price = 57.50

g = dividend growth rate = 8% or 0.08

Next, plug in the numbers to the above DCF formula;

r = (0.864 / 57.5) + 0.08

r = 0.01503 + 0.08

r = 0.095 or 9.5%

Therefore, the cost of equity is 9.50%

the specific actions take by the fed. what the fed was attempting to do by taking these actions. the result of the actions taken by the fed

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20