If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in ord

Question

If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4.00 should be

a) divided by the current price of stock, and the quotient should be added to the dividend growth rate

b) divided by the current price of the stock

c) multipiled by one minus the tax rate, and the difference divided by the current price of the stock

d) multiplied by the sum of one plus the growth rate, and then divided by the current price of the stock; this quotient should be added to the dividend growth rate

Explanation / Answer

option :b

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