A stock's beta is 1.22, the tax rate is 41%, and the market risk premium...
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A stock's beta is 1.22, the tax rate is 41%, and the market risk premium is 5.5% per year. The company's next dividend is expected to be $0.87 per share and the stock price is $17.49 per share. The riskiness of the company's equity requires that it provide a risk premium of 4.3% per year over the yield on its long-term debt. If the expected market return is 10.1% per year, what is the company's annual cost of retained earnings financing? 1) 11.3% 2) 11.8% 3) 11.6% 4) 12.2% 5) 12.4%
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