Groves, Inc.pays an annual dividend of $1.22.This dividend is expected to continue growing at a rate of about 5 percent each year.The firm is in a fairly risky business and has a beta of 1.45.The expected market rate of return is 13.5 percent, and the risk-free rate is 9.3 percent.What is the cost of equity for Groves?
A) 19.6%
B) 13.5%
C) 15.4%
D) 6.1%
Correct Answer:
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