Find the Peach Company's cost of equity if its current share price is $20, the next annual dividend is $1, the accounting return on equity (ROE) is 10%, and the dividend payout ratio is 70%. Assume that the dividend growth rate, ROE, the payout ratio, and the debt ratio will remain constant forever and the firm has no plans to issue new equity in the future.
a. 14.0%
b. 12.0%
c. 8.0%
d. 9.0%
e. 10.0%