The Boston Brewing Company is planning on issuing common stock at a market price of $13 per share. Last year the firm paid an annual dividend of $1.45, and analysyts expect the firm's future dividends will grow at an annual rate of 5 per cent forever. What is Boston Brewing Company's cost of common equity? a.16.71% b. 17.61% c. 17.71% d. 20.71%

The Boston Brewing Company is planning on issuing common stock at a market price of $13 per share. Last year the firm paid an annual dividend of $1.45, and analysyts expect the firm's future dividends will grow at an annual rate of 5 per cent forever. What is Boston Brewing Company's cost of common equity? a.16.71% b. 17.61% c. 17.71% d. 20.71%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 5P

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Question

100%

a.16.71%

b. 17.61%

c. 17.71%

d. 20.71%

Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

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