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Builtrites common stock is currently selling for $46 a share and the firm just paid an annual dividend of $1.80 per share. Management believes that
Builtrites common stock is currently selling for $46 a share and the firm just paid an annual dividend of $1.80 per share. Management believes that dividends and earnings should grow at 7% annually. Based on this, and a marginal tax rate of 34%, what is the cost of common stock (also known as the cost of retained earnings)?
| A.12.9% | ||
| B.11.2% | ||
| C.13.3% | ||
| D.7.4% |
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