As the assistant to the cfo of johnstone inc., you must estimate its cost of common equity. you have been provided with the following data: d0 = $0.80; p0 = $22.50; and gl = 8.00% (constant). based on the dividend growth model, what is the cost of common from reinvested earnings? a. 10.69%b. 11.25%c. 11.84%d. 12.43%e. 13.05%

c. 11.84%

Explanation:

We start fro mthe dividend gros model formula:

We must notice we need next year dividend to calculatethe value of the stock today so we calculate this first:

D1 = D0 x (1+g) = 0.8 x (1+.08) = 0.864

Now we plug the values into the formula and solve for return:

return = 0.1184 = 11.84%

answer; limited pay life;

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o