HighGrowth Company has a stock price of $21. The firm will pay a dividend next year of $0.86, and its dividend is expected to grow at a rate of 3.5% per year thereafter. What is your estimate of High Growth's cost of equity capital? The required return (cost of capital) of levered equity is %. (Round to one decimal place.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
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HighGrowth Company has a stock price of $21. The firm will pay a dividend next year of $0.86, and its dividend is
expected to grow at a rate of 3.5% per year thereafter. What is your estimate of High Growth's cost of equity capital?
The required return (cost of capital) of levered equity is %. (Round to one decimal place.)
Transcribed Image Text:HighGrowth Company has a stock price of $21. The firm will pay a dividend next year of $0.86, and its dividend is expected to grow at a rate of 3.5% per year thereafter. What is your estimate of High Growth's cost of equity capital? The required return (cost of capital) of levered equity is %. (Round to one decimal place.)
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