Question
13. Hybrid Motors has paid increasing dividends of $.42,$.50, $.55, $.65, and $.80 a share over the past five years,respectively. The firm estimates that future
13. Hybrid Motors has paid increasing dividends of $.42,$.50, $.55, $.65, and $.80 a share over the past five years,respectively. The firm estimates that future increases in itsdividends will be comparable to the arithmetic average growth rateover these past five years. The stock is currently selling for$41.50 a share. The risk-free rate is 3.5 percent and the marketrisk premium is 8.6 percent. What is the cost of equity for HybridMotors if the firm's beta is 1.42? A. 12.49 percent B. 15.45 percent C. 17.78 percent D. 18.67 percent E. 19.24 percent
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