You were recently hired by Garrett Design, Inc to estimate its cost of common equity. You obtained the following data: D1 = $1.75; P0 = $42.50; gL = 7.00% (constant); and F = 5.00%. What is the cost of equity raised by selling new common stock?

a. 10.77%
b. 11.33%
c. 11.90%
d. 12.50%
e. 13.12%

b

Business

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