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Memphic Memphic
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6 years ago
Taggart Transcontinental has a divided yield of 2.5%. Taggart's equity cost of capital is 10%, and its dividends are expected to grow at a constant rate.  Based on this information, Taggart's constant growth rate in dividends is closest to:
A) 2.5%
B) 5.0%
C) 10.0%
D) 7.5%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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Replies
wrote...
6 years ago
D
Explanation:  D) P0 =   → re - g =   = .10 - g = .025 = g = .075 or 7.5%
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