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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. 10.95%
b. 15.25%
c. 13.87%
d. 16.78%
e. 11.23%

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