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You are trying to calculate the cost of equity for a particular Company, and you find that the stock has a beta of 1.28. The
You are trying to calculate the cost of equity for a particular Company, and you find that the stock has a beta of 1.28. The return on the market minus the risk free rate is 7.4 percent, and T-bills (risk free rate) are currently yielding 3.6 percent. The last paid dividend was $1.62 per share, and dividends are expected to grow at an annualized rate of 2 percent indefinitely. If the current price of the stock is $38 a share, what is your best estimate of the cost of equity for the company? 7.41 percent 9.41 percent 7.82 percent 9.71 percent 978 percent
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