Cullumber inc.’s common shares currently sell for $42 each. the firm’s management believes that its shares should really sell for $60 each. the firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 5 percent per year forever (and this is common knowledge to the market).

what is the current cost of common equity for the firm? what is the appropiate cost of equity (as per firm belief)

8.5%

Explanation:

Data provided in the question:

Current market price = $42 each

Firm's price = $60

Annual dividend paid = $2 per share

Growth rate = 5%

Now,

Cost of Common Equity

= [ Dividend Next Year ÷ Current Price ] + Dividend Growth Rate

and,

Dividend Next Year = $2 × (1 + 0.05) = $2.1

Therefore,

The current cost of common equity for the firm

= [ Dividend Next Year ÷ Market Price ] + Dividend Growth Rate

= [ $2.1 ÷ $42 ] + 0.05

= 0.1  

or

= 0.1 × 100% = 10%

The appropiate cost of equity (as per firm belief)

= [ Dividend Next Year ÷ Firm's believed Price ] + Dividend Growth Rate

= [ $2.1 ÷ $60 ] + 0.05

= 0.085

or

= 0.085 × 100%

= 8.5%

i believe the answer is: streets and roads

public property refers to the property that can be used by all legal citizens in a certain country. the public property was created and maintain using the government budget that allocated specifically for it. the budget itself come from the citizen's income tax payment.

where is the graph?