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Cost of Equity

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6. You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data: D1 = $1.75; P0 = $42.50; g = 7.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?
10.43%
8.50%
12.24%
11.33%
9.97%

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P0(1-F)=D1/(cost of equity - growth rate)
=> 42.50*(1-.05)=1.75/(cost ...

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