[FONT="]In my question, I'm told that the company has 100 million common shares trading at $90/share. The dividend has historically been $0.50/share but is expected to increase to $2.25 per share in the next period. I am supposed to determine the cost of equity, using 2017's net income divided by average two-year shareholders equity (9.73%)to calculate the return on equity as part of the calculation.
Using the formula, I have a final number of 352% but I feel that is too high. Am I missing something?
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Using the formula, I have a final number of 352% but I feel that is too high. Am I missing something?
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