Estimate of the company cost of equity

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Stock in Country Road Industries has a beta of 1.41. The market risk premium is 8 percent, and T-bills are currently yielding 4 percent. The company's most recent dividend was $2 per share, and dividends are expected to grow at a 6.5 percent annual rate indefinitely. If the stock sells for $34 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

a) 9.64%

b) 14.02%

c) 11.4%

d) 12.76%

e) 15.28%

Reference no: EM131575513

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