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You are a finance intern at Ron's Development Inc. and they have asked you to help estimate the company's cost of common equity. You obtained

You are a finance intern at Ron's Development Inc. and they have asked you to help estimate the company's cost of common equity. You obtained the following data: D₁ = $1.25; P₀ = $27.50; g = 4.00% (constant). What is the cost of equity raised by selling new common stock?

A.

7.52%

B.

9.52%

C.

8.55%

D.

10.18%

E.

12.18%

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