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The stock of the Corporation has a beta of .80. The market risk premium is 9 percent, and the risk-free rate is 6 percent. Today,
The stock of the Corporation has a beta of .80. The market risk premium is 9 percent, and the risk-free rate is 6 percent. Today, the Corporation paid a dividend of $1.00 per share, and the dividend is expected to grow at 8 percent indefinitely. The stock currently sells for $18. Calculate the cost of equity capital for the Corporation using the Dividend Growth Model approach. Which of the following is our answer?
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