Problemstock in country road industries has a beta of 107, Ask an Expert

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Problem:

Stock in Country Road Industries has a beta of 1.07. The market risk premium is 8.5 percent, and T-bills are currently yielding 3.5 percent. The company's most recent dividend was $1.7 per share, and dividends are expected to grow at a 7.5 percent annual rate indefinitely.

Required:

If the stock sells for $40 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

12.6%
8.85%
10.66%
12.33%
12.07%

Note: Please show how you came up with the solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162868

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