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Growth Company's current share price is $20.05, and it is expected to pay a $1.10 dividend per share next year. After that, the firm's dividends
Growth Company's current share price is $20.05, and it is expected to pay a $1.10 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.3% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $1.85 per share fixed dividend. If this stock is currently priced at $28.05, what is Growth Company's cost of preferred stock? a. What is an estimate of Growth Company's cost of equity? The required return (cost of capital) of levered equity is \%. (Round to two decimal places.)
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