Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D0 = $0.80; P0 = $57.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations.
A. 11.02%
B. 10.17%
C. 9.50%
D. 10.07%
E. 7.98%
Answer: C
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