Question: Use the following additional information to answer the question. The companys EPS and dividends are expected to grow 5 percent per year. The current payout

Use the following additional information to answer the question.

The companys EPS and dividends are expected to grow 5 percent per year.

The current payout ratio is of maintained. The current dividend is $1.50 per share per quarter.

The companys beta is 1.25.

The risk-free rate is 6 percent and the market equity risk premium is 5 percent.

Calculate the cost of equity using the Capital Asset Pricing Model (CAPM). Circle one.

10.15% 12.25% 16.3% 20.0%

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