What is the current cost of common equity for the firm

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Reference no: EM131912484

Underestimated Inc.’s common shares currently sell for $45 each. The firm’s management believes that its shares should really sell for $52 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 2 percent per year forever (and this is common knowledge to the market).

What is the current cost of common equity for the firm? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) The current cost of common equity for the firm______________ %

What does management believe is the correct cost of common equity for the firm? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Cost of common equity (as per firm's belief)___________________%

Reference no: EM131912484

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