Amino Industries common shares sell for $100 per share. Amino expects to set their next annual...

Amino Industries common shares sell for $100 per share. Amino expects to set their next annual dividend at $4.00 per share. If Amino expects future dividends to grow at 5 percent per year, indefinitely, the current risk-free rate is 2 percent, the expected rate on the market is 7 percent, and the stock has a beta of 1.5, what should be the best estimate of the firm's cost of equity?

Multiple Choice

18.50 percent
13.25 percent
9.25 percent
7.27 percent

Expert Solution

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jeff jeffy answered 1 year ago

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