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5.) COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpetto's
5.)
COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpetto's common stock currently sells for $23.00 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year. If the firm's beta is 1.4, the risk-free rate is 8.5%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round to TWO decimal places.
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