Rosie's Grill has a beta of 1.2, a stock price of $26 and an expected annual dividend of $1.30 a share which is to be paid next month (i.e. D1 is $1.30). The dividend growth rate is 4 percent. The market has a 10 percent rate of return and a risk premium of 6 percent. What is the average expected cost of equity for Rosie's Grill? O 9.20 percent 9.70 percent 10.10 percent O 10.30 percent O 11.40 percent
Rosie's Grill has a beta of 1.2, a stock price of $26 and an expected annual dividend of $1.30 a share which is to be paid next month (i.e. D1 is $1.30). The dividend growth rate is 4 percent. The market has a 10 percent rate of return and a risk premium of 6 percent. What is the average expected cost of equity for Rosie's Grill? O 9.20 percent 9.70 percent 10.10 percent O 10.30 percent O 11.40 percent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Rosie's Grill has a beta of 1.2, a stock price of $26 and an expected annual
dividend of $1.30 a share which is to be paid next month (i.e. D1 is $1.30). The
dividend growth rate is 4 percent. The market has a 10 percent rate of return and
a risk premium of 6 percent. What is the average expected cost of equity for
Rosie's Grill?
9.20 percent
9.70 percent
10.10 percent
10.30 percent
11.40 percent
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