What is cost of equity raised by selling new common stock


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%

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