The Altoid Co. just paid a dividend of $1.90 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely. If the stock sells for $38 a share, what is the companys cost of equity? What if the floatation cost is 1% of the current market price? (Answer: 11.3%, 11.35%) Jet Corporations common stock has a beta of 1.27. If the risk-free rate is 5 percent and the expected return on the market is 13 percent, what is Jets cost of equity capital? (Answer: 15.16%)

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