QUESTION 6 The cost of equity can be estimated using the dividend discount model. We can rearrange the model to solve for r (the required return, which is also the cost of equity). When we do that, the equation becomes: r = = (D1/PO) + g Where D1 is the upcoming dividend; PO is the price today in the market; and g is the growth rate as a decimal Practice using this formula and calculating the cost of equity (r): Alderaan Incorporated has a current stock price of $46.96. The last dividend was at 3.90, and is expected to grow at a 2% constant rate. What is the firm's cost of common equity? Give your answer as a percentage, rounded to two decimal places (example: 9.58% as 9.58) QUESTION 7 Alderaan Incorporated has just paid a dividend of $4.60. The firm's current price on common stock is $20.42. Dividends are expected to grow at a 5% constant rate. What is the firm's cost of common equity? Give your answer as a percentage, rounded to two decimal places (example: 9.58% as 9.58) 10 points Save Answer 10 points Save Answer