Problemstock in dragula industries has a beta of 12 the, Ask an Expert

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Problem:

Stock in Dragula Industries has a beta of 1.2. The market risk premium is 5 percent, and T-bills are currently yielding 4.90 percent. The company's most recent dividend was $1.90 per share, and dividends are expected to grow at a 5.0 percent annual rate indefinitely.

Required:

Question 1: If the stock sells for $50 per share, what is your best estimate of the company's cost of equity?

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

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162587

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