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25 April, 21:55

Donut delites has a beta of 1.06, a dividend growth rate of 3.2 percent, a stock price of $12 a share, and an expected annual dividend of $.84 per share next year. the market rate of return is 11.4 percent and the risk-free rate is 3.8 percent. what is the firm's cost of equity?

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  1. 25 April, 23:56
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    RE =.038 + 1.06 (.114-.038) =.11856; RE = ($.68/$12) +.012 =.06867; Average RE = (.11856 +.06867) / 2 =.0936, or 9.36 percent
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Home » Business » Donut delites has a beta of 1.06, a dividend growth rate of 3.2 percent, a stock price of $12 a share, and an expected annual dividend of $.84 per share next year. the market rate of return is 11.4 percent and the risk-free rate is 3.8 percent.
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