Calculating Cost of Equity The Pierce Co. just issued a dividend of $2.35 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $44 a share, what is the companys cost of equity?

Calculating Cost of Equity Hoolahan Corporations common stock has a beta of .87. If the risk-free rate is 3.6 percent and the expected return on the market is 11 percent, what is the companys cost of equity capital?

Refer to What is the company's cost of equity? (Hint: Recall the following Gordon growth model: R=D0(1+g)/P0+g) \begin{tabular}{c} 10.6% \\ \hline 12.8% \\ \hline 11.7% \\ \hline 13.9% \end{tabular} Refer to Chapter 12 Question 2. What is the company's cost of equity capital? (Hint: Recall the capital asset pricing model: RStock=RRiskfree+(RMarketRRiskfree)Stock) \begin{tabular}{c} 12% \\ \hline 13% \\ \hline 10% \\ \hline 11% \end{tabular}