R.K. Boats Inc. is in the process of making some major investments for growth and is interested

Question:

R.K. Boats Inc. is in the process of making some major investments for growth and is interested in calculating their cost of equity so as to be able to correctly estimate their adjusted WACC. The firm’s common stock is currently trading for $43.25 and their annual dividend, which was paid last year, was $2.25, and should continue to grow at 6% per year. Moreover, the company’s beta is 1.35, the risk-free rate is at 3%, and the market risk premium is 9%. Calculate a realistic estimate of RKBIs cost of equity. (Ignore floatation costs)

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...