A firm has common stock with a market price of P55 per share and an expected dividend of P2.81 per share at the end of the coming year. The dividends paid on the outstanding stock over the past five years are as follows:

Year

Dividend

1

P 2.00

2

2.14

3

2.29

4

2.45

5

2.62

The cost of the firm's common stock equity is

5.1 percent

15.4 percent

4.1 percent

12.1 percent