Principle of Finance

A firm has the following data: Risk-free rate (kRF)=4%; Market rate of return (kM)=9%; and beta =1.3 What is the firm's cost of retained earnings (k5) based on the capital assets pricing model (CAPM)? 10.5% 11.7% 12.8% 13.6% A firm expects to pay a dividend of $1.75 per share at the end of the year (D1=$1.75) and its common stock now selis for $45 per share. The firm's dividend growth rate is 7% every year. The firm plans to issuathe new common stock and the pecentage flotation cost required to sell the new common stock is 10\%. What is the firm's cost of new common stock, ke ? 10.54% 10.89% 11.32% 11.63%