Problem: You were recently hired by Scheuer Media Inc. to estimate its cost of capital. You obtained the following data:
D1 = $1.30; P0 = $97.50; g = 4.00% (constant); and F = 5.00%.
What is the cost of equity raised by selling new common stock?
a. 5.13%
b. 5.46%
c. 5.40%
d. 5.33%
e. 5.27%