National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of S.92 a share. The dividend growth rate is 22 percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost of equity using the average return of the CAPM and the dividend discount model? Multiple Choice
A. 9.68 percent
B. 1030 percent
C. 8.67 percent
D.10.05 percent
E. 913 percent
