What is the company cost of equity

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1. Suppose risk-free rate on Treasury bonds is 2% and the current market return is 10% and the beta of a company's stock is estimated to be 1.5, what is the company's cost of equity (retained earnings)?

15.10%

15.35%

14.80%

14.15%

14.00%

2. Donati Company's preferred stock sells for $86.00 per share, and it pays an $9.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 3.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

12.29%

12.05%

11.68%

11.39%

11.87%

Reference no: EM131937978

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