Answer:
9.94%
Explanation:
The cost of equity can be determined from the constant dividend growth model
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
50.60 = 2.5 / (r - 0.05)
50.60(r - 0.05) = 2.5
(r - 0.05) = 2.5 / 50.60
(r - 0.05) = 0.0494
r = 0.0494 + 0.05
r = 0.0994
r = 9.94%
