FINANCE-Stock in Nantec Corporation has a beta of 1.4
QUESTION
Stock in Nantec Corporation has a beta of 1.4. The market risk premium is 8%, and T-bills are currently yielding 5.5%. The company’s most recent dividend was $2 per share, and dividends are expected to grow at a 5% annual rate indefinitely. If the stock sells for $42 per share, what is your best estimate of the company’s cost of equity?13.35%14.46%15.57%16.68%17.79%
ANSWER:
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