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5. DIVIDEND VALUATION MODEL (1) A chain of fast food restaurants expects to earn $200 million after taxes. The company h
Posted: Wed Mar 09, 2022 8:42 am
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- 5 Dividend Valuation Model 1 A Chain Of Fast Food Restaurants Expects To Earn 200 Million After Taxes The Company H 1 (22.54 KiB) Viewed 40 times
5. DIVIDEND VALUATION MODEL (1) A chain of fast food restaurants expects to earn $200 million after taxes. The
company has a policy of paying out half of its net income as a dividend to holders of the
company's 100 million shares of common stock. A share of common stock currently sells for eight times earnings. Management and outside analysts estimate that the earnings and dividends of the firm will continue to grow at a rate of 7.5% annually. Calculate the cost of equity capital for the firm.