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Trahan Lumber Company hired you to help estimate its cost of capital. You obtained the following data: D 1 = $1.25; P 0 = $15.00;

Trahan Lumber Company hired you to help estimate its cost of capital. You obtained the following data: D1 = $1.25; P0 = $15.00; g = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?

a.

13.87%

b.

15.53%

c.

13.03%

d.

16.50%

e.

13.45%

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