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20 April, 07:09

Neal Enterprises common stock is currently priced at $36.80 a share. The company is expected to pay $1.20 per share next month as their annual dividend. The dividends have been increasing by 2 percent annually and are expected to continue doing so. What is the cost of equity for Neal Enterprises

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  1. 20 April, 09:18
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    The cost of equity for Neal Enterprises is 5%

    Explanation:

    In order to calculate the cost of equity for Neal Enterprises we would have to make the following calculation:

    cost of equity = ((Do (1+g) / Po) + g

    According to givn data we have the following:

    Do=$1.20

    Po=$36.80

    g=2%

    cost of equity = ((1.20 (1+0.02) / 36.80-1.20) + 0.02

    cost of equity = ((1.20 (1+0.02) / 35.60) + 0.02

    cost of equity=0.05

    The cost of equity for Neal Enterprises is 5%
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Home » Business » Neal Enterprises common stock is currently priced at $36.80 a share. The company is expected to pay $1.20 per share next month as their annual dividend. The dividends have been increasing by 2 percent annually and are expected to continue doing so.
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