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Stock in Dragula Industries has a beta of 1.2. The market risk premium is 8 percent, and T-bills are currently yielding 5.10 percent. The company%u2019s

Stock in Dragula Industries has a beta of 1.2. The market risk premium is 8 percent, and T-bills are currently yielding 5.10 percent. The company%u2019s most recent dividend was $1.50 per share, and dividends are expected to grow at a 8.0 percent annual rate indefinitely.

If the stock sells for $40 per share, what is your best estimate of the company%u2019s cost of equity?

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