What is estimated cost of equity using average of CAPM

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Reference no: EM13885326

Stock in Initrode Software has a beta of 0.78. The market risk premium is 9.9 percent while T-bills are currently yielding 5.5 percent. Initrode's most recent dividend was $1.6 per share, and dividends are expected to grow at a 7 percent annual rate indefinitely. The stock sells for $33 a share. What is the estimated cost of equity using the average of the CAPM approach and the dividend discount approach?

Reference no: EM13885326

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