The stock of Geo Company sells for $32.00, most recent dividend was $1.30. A flotation cost of 10% would be required to issue new common stock. Security analysts are projecting that the common dividend will grow at a rate of 5.50% a year. The yield on 10 year Govt. bond is 5.0% and 3-month T-bill is 2.5%. The beta for Geo's stock is 0.90 and the expected market return is 11.0%. The appropriate bond risk premium is 3.0% for the bond-yield-plus risk premium approach.

What is Geo's cost of equity from retained earnings using DCF method?

Answer rating: 100% (QA)

Heres how to calculate Geos cost of equity from retained earnings using the DCF method 1 De... View the full answer