Business
Business, 12.08.2020 04:01, alyssadgonzalez

A company’s last dividend was $1.35 per share and the dividends are expected to grow forever at a constant rate of 6.3% per year. The riskiness of the company’s equity requires that it provide a risk premium of 4.0% per year over the yield on its long-term debt. The stock’s beta is 0.85, the tax rate is 37%, and the market risk premium is 5.7% per year. If the expected market return is 8.8% per year, what is the company’s annual cost of retained earnings financing?

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