Question: Using the constant growth model, a firm's expected dividend yield ( D 1) is 4% of the stock price, and its growth rate is 5%.

Using the constant growth model, a firm's expected dividend yield (D1) is 4% of the stock price, and its growth rate is 5%. If the tax rate is 35%, what is the firm's cost of equity?

10%

6.65%

9.0%

5.85%

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