[lilsugar20711]

Assume that a college education will cost $280,000 when your child enters college in 18 years. You currently have $39,000 saved. What annual rate of interest must you earn to cover the cost of the education?

[lilsugar20711]

Calculating Cost of Equity. The Troxel Co. just issued a dividend of $2.30 per
Share on its common stock. The company is expected to maintain a constant
6 percent growth rate in its dividends indefinitely. If the stock sells for $42 a share,
What is the company’s cost of equity?

[lilsugar20711]

Calculating Returns. Suppose a stock had an initial price of $83 per share, paid a
Dividend of $1.40 per share during the year, and had an ending share price of $91.
Compute the percentage total return.

[ScottGem]

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[ek2812]

Cost of equity= share price ($2.30) / market price value ($42) + growth (6%)

2.3/42 + .06 = 11.47

now that we've got that sorted.. how did you find that information in order to work out equity and debt? Because I need to work out a wacc for a company in the London stock exchange but I can't seem to find the same information. Where did you look to get all that info on the company above?

[denzil87]

For your cost of equity I would adopt the rearranged growth model so ke = do(1+g)/MPS + G

That gives you 12(1+0.07)/(254-12) +0.07 = 12.14$

Note it is 254-12 and not 254 because 254 is div. and we need ex div.

[morgaine300]

ek2812 & denzil87, you too need to read the guidelines that ScottGem posted. This goes for answering people's homework also.