Calculate the cost of the firms common stock equity

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Reference no: EM13781479

A. A firm has a beta of 1.2. The market return equals 14% and the risk-free rate of return equals 6%. Calculate the estimated cost of common-stock equity funding on a percentage basis.

B. A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5%. Calculate the cost of the firm’s common stock equity.

C. Given that the cost of common stock is 18%, dividends are to be $1.50 per share, and the price of the stock is $12.50 per share, which is the annual growth rate of the firm’s dividends?

Reference no: EM13781479

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