Question: Kovach Lumber Company hired you to help estimate its cost of capital. You were provided with the following data: D1 = $1.10; P0 = $27.50; g = 6.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?
a. 9.41%
b. 9.80%
c. 10.21%
d. 10.62%
e. 11.04%