Estimate of the companys cost of equity

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Stock in Dragula Industries has a beta of 1.8. The market risk premium is 5 percent, and T-bills are currently yielding 4.80 percent. The company’s most recent dividend was $2.00 per share, and dividends are expected to grow at a 5.0 percent annual rate indefinitely.

If the stock sells for $35 per share, what is your best estimate of the company’s cost of equity?

Reference no: EM13765688

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