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    Internal equity capital

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    The following financial information is available on Rawls Manufacturing Company:
    Current per share market price $48.00
    Current (t=0)per share dividend $ 3.50
    Expected long-term growth rate 5.0%
    Rawls can issue new common stock to net the company $44 per share. Determine the cost of internal equity capital (Ke)using the Dividend Valuation Model Approach (DCF) (Compute answer to the nearest 0.1%).

    The answers are one of the following:
    a. 12.3%
    b. 13.4%
    c. 13.0%
    d. 12.7%

    © BrainMass Inc. brainmass.com June 3, 2020, 5:35 pm ad1c9bdddf
    https://brainmass.com/business/business-math/internal-equity-capital-31494

    Solution Summary

    This shows how to determine the cost of internal equity capital (Ke)using the Dividend Valuation Model Approach (DCF)

    $2.19

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