Problem: National Renta Center has a beta of $1.38 a stock price of $19. and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the firm's cost of equity.
1. 7.05 percent
2. 8.67 percent
3. 9.13 percent
4.10.30 percent
e. 11.56 percent