Enable Editing Protected View C D E F G K Cost of common stock: Underestimated Inc.'s common shares currently sell for $36 per share The firm believes that its shares should really sell for $54 per share. If the firm just paid an annual dividend of $2 per share and the firm expects those dividends to increase by 8 percent per year forever (and this is common knowledge to the market), what is the current cost of common equity for the firm and what does the firm believe is a more appropriate cost of common equity for the firm? 13.21 $36 Current stock price Firm's expected stock price Dividend just paid (Do) Constant growth rate $54 $2 8% Current cost of common equity Appropriate cost of equity (as per firm's belief) 2 23 24 25 26 134 20 17 Peady Type here to search