Sunland Inc.’s common shares currently sell for $35 each. The firm’s management believes that its shares should really sell for $42 each. The firm just paid an annual dividend of $2 per share and...

Sunland Inc.’s common shares currently sell for $35 each. The firm’s management believes that its shares should really sell for $42 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 5 percent per year forever (and this is common knowledge to the market).

- What is the current cost of common equity for the firm?