Based on the DCF approach, what is the cost of equity from retained earnings?
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19. Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D0 = $0.80; P0 = $77.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
8.66%
7.20%
10.12%
9.11%
10.30%
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This solution consists of a brief, concise calculation of price of stock and cost of equity to solve the problem being asked.
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