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CFA Level 1
Corporate Finance

Cost of Equity Calculation via DDM

Easy Cost Of Capital Cost Of Equity

ABC Corporation is considering the use of the Dividend Discount Model (DDM) to estimate its cost of equity. The company pays an annual dividend of $4 per share, which is expected to grow at a rate of 6% per year. If the current price of the stock is $60, what is the estimated cost of equity for ABC Corporation?

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