P14-1 Calculating Cost of Equity [LO1]

The Down and Out Co. just issued a dividend of $2.40 per share on its common stock. The company is expected to maintain a constant 5.5 percent growth rate in its dividends indefinitely. If the stock sells for $52 a share, the company's cost of equity is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))