Oriole Inc.$\text{'}$s common shares currently sell for $$40$ each. The firm's management believes that its shares should really sell for $$50$ each. If the firm just paid an annual dividend of $$2$ per share and management expects those dividends to increase by $2$ percent per year forever $($and this is common knowledge to the market$).$

Problem $13\mathrm{.}20$ a$1-$a$2($Solution Video$)($a$1)$

What is the current cost of common equity for the firm? $($Round intermediate calculations and final answer to $2$ decimal places, e$.$g$.15\mathrm{.}25\%.)$

The current cost of common equity for the firm

$\%$

The current cost of common equity for the firm

$\%$

eTextbook and Media

Attempts: $1$ of $3$ used

Problem $13\mathrm{.}20$ a$1-$a$2($Solution Video$)($a$2)$

What does management believe is the correct cost of common equity for the firm? $($Round intermediate calculations and final answer to $2$ decimal places, e$.$g$.15\mathrm{.}25\%.)$

Cost of common equity $($as per firm's belief$)$

$\%$