Problem:
The common stock of Omega Corp is selling for $50 per share. It is expected that Omega will pay a dividend of $5 per share this year. In addition, analysts have indicated that the company has been growing at a constant rate of 3%, and the growth is expected to continue forever.
Required:
Question: What is Omega's cost of Retained Earning?
Note: Please explain comprehensively and give step by step solution.