Question 6

Suppose your company has an equity beta of 1.0 and the current risk-free rate is 6.0%. If the expected market risk premium is 8.6%, what is your cost of equity capital?

8.1%

9.6%

10.3%

14.6%.

Question 7

A stock sells for $20 per share, its next dividend expected to pay (D1) is $1.00, and its growth rate is a constant 6%. What is its cost of common stock?

		5.3%
		11.0%
		11.3%
		11.6%