Regent Corporation stock is expected to pay $2.50 per share as its next annual dividend. The company has a policy of increasing the dividend by 9.5% annually. The stock currently trades at $16.75 and has a beta of 2.4. The market risk premium is 7.8%, and the risk-free rate is 5.2%. What is the cost of equity? a. 25.91% b. 27.25% c. 23.92% d. 27.80%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 19P
Question

What is the cost of equity on these financial accounting question?

Regent Corporation stock is expected to pay $2.50
per share
as its next annual dividend. The
company has a policy of increasing the dividend by
9.5% annually. The stock currently trades at
$16.75 and has a beta of 2.4. The market risk
premium is 7.8%, and the risk-free rate is 5.2%.
What is the cost of equity?
a. 25.91%
b. 27.25%
c. 23.92%
d. 27.80%
Transcribed Image Text:Regent Corporation stock is expected to pay $2.50 per share as its next annual dividend. The company has a policy of increasing the dividend by 9.5% annually. The stock currently trades at $16.75 and has a beta of 2.4. The market risk premium is 7.8%, and the risk-free rate is 5.2%. What is the cost of equity? a. 25.91% b. 27.25% c. 23.92% d. 27.80%
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