Trahan Lumber Company Hired You to Help Estimate Its Cost

question 57

Multiple Choice

Trahan Lumber Company hired you to help estimate its cost of capital.You obtained the following data: D₁ = $1.25;P₀ = $22.50;g = 5.00% (constant) ;and F = 6.00%.What is the cost of equity raised by selling new common stock?

• A) 8.84%
• B) 10.91%
• C) 11.78%
• D) 10.58%
• E) 11.35%

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