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Find Cost of equity from retained earnings

Assume that Mary Brown Inc. hired you as a consultant to help it estimate the cost of capital. You have been provided with the following data: D0 = $1.20; P0 = $40.00; and g = 7% (constant). Based on the DCF approach, what is Brown's cost of equity from retained earnings?

a. 10.06%

b. 10.21%

c. 10.37%

d. 10.54%

e. 10.68%

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