Answer:
12.71%
Step-by-step explanation:
The computation of the cost of common equity using the DCF approach is shown below:
As we know that
Cost of common equity = Current year dividend ÷ Current price of the stock + growth rate
= $1.89 ÷ $24.50 + 0.05
= 0.0771 + 0.05
= 12.71%
We simply applied the above formula so that the cost of common equity could arrive