Cops are Tops is a private security firm that provides consulting and marketing services for...
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Cops are Tops is a private security firm that provides consulting and marketing services for law enforcement. Its share price is currently $23.86 per share and the firm is expected to pay a dividend of $1.58 per share in one year. You estimate that its share price immediately after paying that dividend will be $26.44 per share. Given the above information: (a) Assuming that the market is correctly pricing the shares of Cops are Tops, the implied cost of equity capital for the firm is % per annum. (Round your answer to four decimal places) (b) From that required rate of return, the portion that Cops are Tops expects to satisfy with its dividend yield is (Round your answer to four decimal places) (c) Capital gains of % will satisfy the remaining portion of the equity investors' required rates of return. (Round your answer to four decimal places)
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