Estimate the companys cost of equity capital

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Reference no: EM131044200

K-Far stores has launched an expansion program that should result in the saturation of the Bay Area marketing region in California in six years. As a result, the company is predicting growth in earnings of 12 percent for three years and 6 percent for the fourth through six years, after which it expects constant earnings forever. The company expects to increase its annual dividend per share, most recently $2, in keeping with this growth pattern. Currently, the market price of the stock is $25 per share. Estimate the company's cost of equity capital.

Reference no: EM131044200

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