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What is the current cost of common equity

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Cost of common stock:

Underestimated Inc.'s common shares currently sell for $36 per share. The firm believes that its shares should really sell for $54 per share. If the firm just paid an annual dividend of $2.00 per share and the firm expects those dividends to increase by 8 percent per year forever (and this is common knowledge to the market), then what is the current cost of common equity for the firm and what does the firm believe is a more appropriate cost of common equity for the firm?

Reference no: EM132355711

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