What is the cost of equity

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DU recently paid a dividend of $2.90. An analyst expects that the firm's dividend rate will grow at a constant rate of 4% indefinitely. He also determines DU's beta is 1.2, the risk-free rate is 1.95%, and the expected return on the market is 8%.

a. What is the cost of equity?

b. What is the current value of DU's shares?

Reference no: EM133112994

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