Ben’s Ice Cream just paid their annual dividend of $.75 a share. The s

Ben’s Ice Cream just paid their annual dividend of $.75 a share. The stock has a market price of $32 and a beta of .90. The return on the U.S. Treasury bill is 4 percent and the market has a 12 percent rate of return. What is the cost of equity?

A) 7.24 percent
B) 8.67 percent
C) 11.20 percent
D) 12.92 percent
E) 14.80 percent

ANSWER

C