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Intro Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect the firm's dividends to grow by

Intro

Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect the firm's dividends to grow by 8% forever. Its stock price is $38.3 and its beta is 1. The risk-free rate is 2% and the expected market risk premium is 4.5%.

Attempt 1/8 for 10 pts.

Part 1

What is the best guess for the cost of equity?

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