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%
Correct Answer:
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