What’s the DCF cost of retained earnings, ks? Given: D0 = $4.19; P0 = $50; g = 5%.

D1

P0

D0(1 + g)

P0

$4.19(1.05)

$50

ks = + g = + g

= + 0.05

= 0.088 + 0.05

= 13.8%.

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