Kelso's just paid an annual dividend of $1.20 a share. The market price of the stock is $26.60 and the growth rate is 4%. What is the firm's cost of equity?
A. 8.38
B. 8.51
C. 8.57
D.8.69
E. 8.74
We see that the firm's cost of equity is given as equal
to=1.20*(1+4%)/26.60+4%=8.692%
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