Assume that you are a consultant to Morton Inc., and you have been provided with the following data: D1 = $1.00; P0 = $25.00; and g = 6% (constant). What is the cost of equity from retained earnings based on the DCF approach?

Question

Assume that you are a consultant to Morton Inc., and you have been provided with the following data:   D1 = $1.00; P0 = $25.00; and g = 6% (constant). What is the cost of equity from retained earnings based on the DCF approach?

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tricica · Answer

This is what I got so far and it looks wrong 6.04 r = D1 + g P0