Multiple Choice
Haulsee Inc. pays no dividend currently but is expected to start paying a small dividend next year. The 5-year old firm has a beta of 1.25 and current earnings of $0.90 per share. The current Treasury bill rate is 6.1% and the market risk premium is 8.8%. Determine Haulsee's cost of equity from retained earnings if the firm's tax rate is 40%.
A) 9.48%
B) 17.1%
C) 14.9%
D) Cannot determine from the above information
Correct Answer:
Verified
Correct Answer:
Verified
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