Stock in country Road Industries has a beta of 1.46. The market risk premium is 7.5 percent while T-bills are currently yielding 2.5 percent. Country Road's last dividend was $1.55 per share and dividends are expected to grow at an annual rate of 4.5 percent indefinitely. The stock sells for $26 a share. What is the estimated cost of equity?
a. 11.96 percent
b. 13.45 percent
c. 10.73 percent
d. 12.09 percent
e. 10.46 percent
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