$12m ordinary share currently valued at $3per share finance Okun plc.A divided of $7m is the payment.calculate the cost of equity
To calculate the cost of equity, we can use the dividend discount model (DDM) formula:
Cost of Equity = Dividend / Current Stock Price
Given:
Dividend = $7m
Current Stock Price = $3 per share
First, we need to find the total number of shares:
Total Shares = $12m / $3 per share
Total Shares = 4 million shares
Now, we can calculate the cost of equity:
Cost of Equity = $7m / 4 million shares
Cost of Equity = $1.75 per share
Therefore, the cost of equity for Okun plc is $1.75 per share.