Cost of equity

rahuljagetiya
Posts: 4
Joined: Thu Nov 28, 2013 4:45 am

Cost of equity

Postby rahuljagetiya » Thu Nov 28, 2013 5:34 am

Hologram is a fast growing restaurant chain. Its company is growing 7% YoY and the company had last paid out a dividend of 5$. The share is currently trading for 52.35$ at NYSE. The company plans to raise further capital from the stock markets and wants to find the cost of equity. The cost of equity is closest to

My answer is 17.22, but its wrong has per answer sheet

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Cost of equity

Postby pradeeppdy » Fri Nov 29, 2013 6:38 am

I think here your calculation is right. Please check the source of answer.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Cost of equity

Postby pradeeppdy » Fri Apr 04, 2014 6:35 am

The formula for calculating Ke = cost of equity . Po = D1/ (Ke - g) . By putting the values in formula we get 52.35 = (5*1.07) / (Ke-.07) .
So that Ke = 17.22 ans


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