Problem:
Southern Home Cookin' just paid its annual dividend of $.75 a share. The stock has a market price of $27 and a beta of 0.9. The return on the U.S. Treasury bill is 5 percent and the market risk premium is 13 percent.
Required:
Question: What is the cost of equity?
- 16.70 percent
- 12.74 percent
- 14.17 percent
- 18.42 percent
- 20.30 percent
Note: Provide thorough explanation of every question given in the problem.