Problem:
Chelsea Fashions is expected to pay an annual dividend of $1.10 a share next year. The market price of the stock is $24.00 and the growth rate is 4 percent.
Required:
What is the firm's cost of equity?
- 8.63 percent
- 8.58 percent
- 8.27 percent
- 8.40 percent
- 8.46 percent
Note: Be sure to show how you arrived at your answer.