Gabaldon Group has a stock price of $48.75, a beta of 1.3, and just paid an annual dividend of $1.25 per share. The dividend growth rate is expected to be 6.5 percent per year. What is the estimated cost of equity using the dividend discount model?

a) 2.56%

b) 9.23%

c) 12.00%

d) 9.06%

e) 2.73%

Answer rating: 100% (QA)

d 906 The formula for the cost of equity Cost of equity Annualized dividends per shareCurrent stock price Dividend growth rate The annualized dividend ... View the full answer