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 6 percent, and T-bills are currently yielding 4.90 percent. The company's most recent dividend was $1.30 per share, and dividends are expected to grow at a 8.0 percent annual rate indefinitely.

Task:

Question: If the stock sells for $36 per share, what is your best estimate of the company's cost of equity?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172836

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