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Trahan Lumber Company Hired You to Help Estimate Its Cost

Question 10

Multiple Choice

Trahan Lumber Company hired you to help estimate its cost of capital.You obtained the following data: D1 = $1.25; P0 = $27.50; g = 5.00% (constant) ; and F = 6.00%.What is the cost of equity raised by selling new common stock?


A) 9.06%
B) 9.44%
C) 9.84%
D) 10.23%
E) 10.64%

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