Company annual cost of retained earnings financing

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The yield to maturity for a company's long-term debt is 8.1% per year. The company's common stock has a market value of $47.89 per share and its last dividend was $3.15 per share. The stock's beta is 0.98, the tax rate is 31%, and the market risk premium is 5.1% per year. If the riskiness of the company's equity requires that it provide a risk premium of 3.5% per year over the yield on its long-term debt, what is the company's annual cost of retained earnings financing?

Reference no: EM132503851

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