Answer: 13.53%
Explanation:
The following information can be gotten from the question:
Price of stock, Po = $79
Growth rate, g = 11%%
Dividend, D1 = $2.00
Ks = Unknown
Po =D1/(Ks-g)
Therefore, Ks = g + D1/P0
= 11% + 2.00/79
= 0.11 + 0.0253
= 0.1353
= 13.53%
Floataton cost is not relevant here as it is used only for Issue of stock.
