CIMA F2 Advanced Financial Reporting F2 Question # 4 Topic 1 Discussion

CIMA F2 Advanced Financial Reporting F2 Question # 4 Topic 1 Discussion

F2 Exam Topic 1 Question 4 Discussion:
Question #: 4
Topic #: 1

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.

The current share price is $3.05.

The cost of equity using the dividend valuation model is:


A.

12.4%


B.

11.9%


C.

7.4%


D.

6.9%


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