Reliable Electric is a regulated public utility, and it is expected to provide s
ID: 2634302 • Letter: R
Question
Reliable Electric is a regulated public utility, and it is expected to provide steady growth of dividends of 6% per year for the indefinite future. Its last dividend was $5 per share; the stock sold for $40 per share just after the dividend was paid. What is the company
Reliable Electric is a regulated public utility, and it is expected to provide steady growth of dividends of 6% per year for the indefinite future. Its last dividend was $5 per share; the stock sold for $40 per share just after the dividend was paid. What is the company
Explanation / Answer
Cost of equity=(Dividend/Price)+g=(5/40)+0.06=0.125+0.06=0.185 or 18.5%