Problem-Calculating Cost of Equity [LO 1]
Stock in CDB Industries has a beta of 1.14. The market risk premium is 7.4 percent, and T-bills are currently yielding 4.4 percent. CDB’s most recent dividend was $3.80 per share, and dividends are expected to grow at a 5.4 percent annual rate indefinitely.
Required:
If the stock sells for $60 per share, what is your best estimate of CDB’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Cost of equity %