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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?

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

    Solution Summary

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