Assume that you are a consultant to Broske Inc., and you have been provided with the following

Question:

Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67; P0 = $42.50; and g = 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach?

1. 9.96%

2. 11.30%

3. 7.95%

4. 9.58%

5. 11.68%

Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...