2B4B THE HATCH SAUSAGE COMPANY IS PROJECTING AN ANNUAL GROWTH RATE FO...

136.

CSO: 2B4b

LOS: 2B4b

The Hatch Sausage Company is projecting an annual growth rate for the foreseeable

future of 9%. The most recent dividend paid was $3.00 per share. New common stock

can be issued at $36 per share. Using the constant growth model, what is the

approximate cost of capital for retained earnings?

a.

9.08%.

b.

17.33%.

c.

18.08%

d.

19.88%.