What is the average cost of equity

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Point 1: Estimating the cost of equity and prefers to use the average of the CAPM model and the dividend growth model. The following information is available. The risk-free rate is 5%, the expected return on the market is 16%, and the beta of the firm is 1.3. The company plans to pay $1.75 in dividends next year and dividend growth is expected to be 6%. The price of the stock is currently $13.67.

Question 1: What is the average cost of equity?

Reference no: EM132505886

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