Manag., July-2018 – Q91

0. A firm is currently earning ` 50,000 and it's one share has a present market value of ` 175. It has 5,000 shares outstanding. The earnings of the firm are expected to remain stable and it has a payout ratio of 100%. The cost of equity is:

Answer
Comment
Array

Option : B
Explanation :
Cost of Equity = Reciprocal of P/E Ratio
= 1/17.5 =5.71%.

Forgot your password?

I agree with the Terms.