Answered! In computing the cost of common equity. If the next annual dividend payment (D1) decreases and the price of the…

1 In computngthe cost of common equity ifthe next annual diviaend payment (p1)de reases and the beceofme common equity Po)increases.the cost of the common equity (Kel will select one Quenton 37 Not yet answered Ports A increase B decrease c remain the same D not matter

In computing the cost of common equity. If the next annual dividend payment (D1) decreases and the price of the common equity (Po) increases, the cost common equity (Ke) will Select one: A. increase. B. decrease. C. remain the same D. not matter

Expert Answer

B. Decrease

Using the formula:

Cost of equity= (divident in next period/current market price)+ growth rate

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