Question
Asked Feb 2, 2020
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Salte Corporation is issuing new common stock at a market price of $27.00. Dividends last year were $1.45 and are expected to grow at an annual rate od 6.0 percent forever. What is Salte's cost of common equity?

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Expert Answer

Step 1

The below expression can be used to calculate cost of common equity:

Finance homework question answer, step 1, image 1

Step 2

The cost of common equity is calculated below:

Finance homework question answer, step 2, image 1

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