Common stock financing based on dividend valuation approach

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Reference no: EM132058708

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You have gathered the following information about your firm:

Current Stock Price (Common) ==> $46

Forecasted Dividend (D1) ==> $2.82

Beta ==> 0.7

YTM on Debt ==> 5.39%

Coupon Rate on Debt ==> 7.89%

Treasury Bond Yield ==> 5.98%

Growth Rate on Dividends ==> 4.6%

Market Risk Premium (km - krf) ==> 7%

Risk Premium for our stock over our bonds ==> 3.5%

Based on this, estimate the cost of common stock financing based on the dividend valuation approach. Round to 2 decimal places in percentage terms.

Reference no: EM132058708

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