What is the firm's cost of equity on these financial accounting question? National Home Rentals has a beta of 1.38, astock price of $19, and recently paid an annualdividend of $0.94 a share. The dividend growthrate is 4.5 percent. The market has a 10.6percent rate of return and a risk premium of 7.5percent. What is the firm's cost of equity?

Step 1: Given Value for Calculation Beta = b = 1.38Current Price of Stock = p = $19Current Dividend…

Answered: National Home Rentals has a beta of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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National Home Rentals has a beta of 1.38, a stock price of $19, and recently paid an annual dividend of $0.94 a share. The dividend growth rate is 4.5 percent. The market has a 10.6 percent rate of return and a risk premium of 7.5 percent. What is the firm's cost of equity?