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18 1.5 Points R.K. Boats Inc. is in the process of making some major investments for growth and is interested in calculating its cost of
18 1.5 Points R.K. Boats Inc. is in the process of making some major investments for growth and is interested in calculating its cost of equity to correctly estimate its adjusted WACC. The firm's common stock is currently trading for $43.25. Its annual dividend, which was paid last year, was $2 and should continue to grow at 7% per year. Moreover, the company's beta is 1.35, the risk-free rate is 3%, and the market risk premium is 8%. Which of the following is a reasonable estimation of the firm's cost of equity
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