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To help them estimate the company's cost of capital, Smithco has hired you as a consultant. You have been provided with the following data: D1

To help them estimate the company's cost of capital, Smithco has hired you as a consultant. You have been

provided with the following data: D1 = $1.45; P0 = $22.50; and g = 6.50% (constant). Based on the DCF

approach, what is the cost of common from reinvested earnings?

Please show work. Thank you!

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