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You Are a Finance Intern at Chambers and Sons and They

Question 26

Multiple Choice

You are a finance intern at Chambers and Sons and they have asked you to help estimate the company's cost of common equity. You obtained the following data: D1 = $1.25; P0 = $27.50; gL = 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%

Correct Answer:

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