A firm with a beta of 122 just paid its annual dividend of


Question: A firm with a beta of 1.22 just paid its annual dividend of $5.64 a share. The dividends increase at a rate of 2% annually. The risk-free rate is 3.5%, the market rate of return is 12.4%, and the dividend discount rate is 11.6%. What is the best estimate of the firm's cost of equity if the firm's stock currently sells for $60 a share using an average of methods?

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Finance Basics: A firm with a beta of 122 just paid its annual dividend of
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