# Cost of Equity

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%

https://brainmass.com/business/flow-to-equity/cost-of-equity-310634

#### Solution Preview

P0(1-F)=D1/(cost of equity - growth rate)

=> 42.50*(1-.05)=1.75/(cost ...

#### Solution Summary

The solution goes into a great amount of detail regarding the question being asked. Step by step explanation is provided for each part of the question which makes it very easy to follow along for anyone with just a basic understanding of the concepts. Overall, an excellent response to the question being asked.

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