Business, 30.03.2020 18:41 xxaizuwu

S. Bouchard and Company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $0.85; P0 = $22.00; and g = 6.00% (constant). The CEO thinks, however, that the stock price is temporarily depressed, and that it will soon rise to $40.00. Based on the DCF approach, by how much would the cost of equity from retained earnings change if the stock price changes as the CEO expects? a. −1.66% b. −2.03% c. −2.23% d. −1.84% e. −1.49%

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S. Bouchard and Company hired you as a consultant to help estimate its cost of capital. You have obt...