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The return on the market is 11%.A firm's beta is 1.4,and the risk-free rate is 6%.The stock is currently selling for $18 and the next dividend is expected to be $1.75.The firm's growth rate is 5%.The pre-tax cost of debt is 10% and the equity risk premium is 5%.Estimate the cost of equity by taking an average of the three methods to determine the cost of equity.
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