Easy Car Corp. is a grocery store located in the Southwest. It paid an annual dividend

of $$4\mathrm{.}00$ last year to its shareholders and plans to increase the dividend annually at

the rate of $4\mathrm{.}0\%.$ It currently has $4,000,000$ common shares outstanding. The shares

currently sell for $$45$ each. Easy Car's common stock has a beta of $0\mathrm{.}8$

The expected market return is $11\%$ and the risk free rate is $2\%.$ The corporate tax

rate is $40\%.$

What is the best estimate of the cost of equity to use in the computation of the

WACC for Easy Car Corp.?

When answering this problem enter your answer with the $\%$ and use two decimals

$($rounding$).$ For example, if your answer is $0\mathrm{.}10469$ then enter $10\mathrm{.}47$; if your answer is

$10\%$ then enter $10\mathrm{.}00$

Your Answer:

Answer