Calculate the cost of equity using the capm

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The equity of Paprika Developments has a beta of 0.8. The earnings of Paprika are expected to grow at 8% indefinitely. Paprika maintains a constant payout ratio. The risk-free rate is 3.5% and the expected return on the market is 9%. Its last dividend was $0.25 cents per share and a share is currently selling for $4.40. Calculate the cost of equity using the CAPM.

Reference no: EM132700861

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