$12m ordinary share currently valued at $3per share finance Okun plc.A divided of $7m is the payment.calculate the cost of equity

Answer 1

To calculate the cost of equity, we can use the dividend discount model (DDM) formula:

Cost of Equity = Dividend / Current Stock Price

Given:
Dividend = $7m
Current Stock Price = $3 per share

First, we need to find the total number of shares:

Total Shares = $12m / $3 per share
Total Shares = 4 million shares

Now, we can calculate the cost of equity:

Cost of Equity = $7m / 4 million shares
Cost of Equity = $1.75 per share

Therefore, the cost of equity for Okun plc is $1.75 per share.