# Cost of equity

National Renta Center has a beta of $1.38 a stock price of $19. and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the firm's cost of equity.

1. 7.05 percent

2. 8.67 percent

3. 9.13 percent

4.10.30 percent

e. 11.56 percent

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#### Solution Preview

National Rent a Center has a beta of $1.38 a stock price of $19. and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the firms cost of equity.

1. 7.05 percent

2. 8.67 ...

#### Solution Summary

MCQ on Cost of equity answered and explained.

$2.19