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Question 10: Please estimate the cost of common equity. You have been provided with the following data: D 0 = $0.80; P 0 = $22.50;

Question 10:

Please estimate the cost of common equity.

You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings?

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