Stock in Daenerys Industries has a beta of 0.77. The market risk premium is 8.5 percent, and T-bills are currently yielding 3.5 percent. The company's most recent dividend was $1.7 per share, and dividends are expected to grow at a 4.5 percent annual rate indefinitely. If the stock sells for $35 per share, what is your best estimate of the company's cost of equity?

rev: 09_20_2012

Multiple Choice

• 9.81%

• 8.66%

• 9.58%

• 7.35%

• 10.05%