16.46% is the estimated cost of equity on your investment.
Cost of equity = D0 * (1+g) / P0 + g
= $3 * (1 + 7.5%) / $36 + 7.5%
= ($3.225 / $36) + 7.5%
= 8.96% + 7.5%
= 16.46%
Cost of equity on your investment = 16.46%
The definition of investment is an asset that is purchased or invested to build wealth and save money from hard-earned income or capital appreciation. The importance of an investment is primarily to gain an additional source of income or to make a profit from the investment over a period of time.
Investing is the dedication of an asset to increase its value over a period of time. Making an investment requires sacrificing your current assets such as time, money and effort. The purpose of investment in finance is to generate profit from the invested assets.
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