JoyFM common stock has a beta of 1.98. The stock is currently selling for $12 a share. The expected market return is 11 percent, and the expected market risk premium is 8 percent. According to analysts’ estimates, its dividend will grow at 5% per year. The company is expected to pay a dividend of $1.7 per share next year. What is the cost of equity of JoyFM company (Use SML and DGM)?

Answer rating: 100% (QA)

1 Cost of Equity using SML The SML formula is Cost of Equity SML RiskFree Rate Beta Market Risk Prem... View the full answer