Correct Answer - Option 1 : 17.6%
Concept:
\(Cost\;of\;equity = \frac{{DP}}{{MPS}} + r\)
Calculation:
Given:
Market price per share = Rs 125, Dividend per share = Rs 12, Rate = 8 % = 0.08
Now,
\(Cost\;of\;equity = \frac{{DP}}{{MPS}} + r\)
\(\therefore Cost\;of\;equity = \frac{{12}}{{125}} + 0.08\)
∴ Cost of equity = 0.096 + 0.08 = 0.176
Thus, the cost of equity = 17.6%