Best estimate of the companys cost of equity

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Stock in Dragula Industries has a beta of 1.4. The market risk premium is 7 percent, and T-bills are currently yielding 4.40 percent. The company’s most recent dividend was $1.60 per share, and dividends are expected to grow at a 6.0 percent annual rate indefinitely.

If the stock sells for $32 per share, what is your best estimate of the company’s cost of equity? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Reference no: EM13766252

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