Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 4% forever. Its stock price is $38.7 and its beta is 1.1. The risk-free rate is 2% and the expected return on the market portfolio is 8%.

What is the best guess for the cost of equity?

Answer rating: 100% (QA)

The cost of equity can be estimated using the Gordon Growth Model Dividend Discount M... View the full answer