Golden Eagle Airlines $($GEA$)$ is trying to estimate the required return on common equity. $$The company pays a dividend of $$2\mathrm{.}00.$ Their current stock price is $$20\mathrm{.}00.$ The dividend is expected to grow at a rate of $4\%$ forever. $$Their stock has a beta of $0\mathrm{.}9.$ The risk$-$free rate is $3\%$ and the market return is $13\%.$What is your estimate of the cost of equity?

Answer rating: 100% (QA)

The cost of equity can be calculated using the Gordon Growth Model or the Capital Asset Pricing Mode... View the full answer