The following financial information is available on Global Enterprises:
Current per share market price: $12.25
Current (t = 0) per share dividend: $2.00
Expected long-term growth rate: 9.5%
Global can issue new common stock to net the company $10.50 per share. Determine the cost of external equity capital using the dividend capitalization model approach (i.e., constant dividend growth valuation model).
A. 30.36%
B. 28.55%
C. 27.38%
D. 25.83%