What is the current cost of common equity for the firm

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Reference no: EM13281118

Underestimated Inc.'s common shares currently sell for $35 each. The firm's management believes that its shares should really sell for $41 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 8 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, and final answer to 2 decimal places.)

Reference no: EM13281118

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