Answer:
Ke 0.118
Explanation:
Given the gordon moel formula we clear for Ke and solve:
[tex]\frac{divends}{return-growth} = Intrinsic \: Value[/tex]
[tex]\frac{divends}{Price} = return-growth[/tex]
[tex]\frac{divends}{Price} + growth = return[/tex]
[tex]$Cost of Equity =\frac{D_1}{P} +g[/tex]
D1 3.15
P 50
f 0.00
g 0.055
[tex]$Cost of Equity =\frac{3.15}{50(1-0)} +0.055[/tex]
Ke 0.118
