Problem 12-1 Calculating Cost of Equity [LO 1]

The Lo Tech Co. just issued a dividend of $2.50 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely.

Required:

If the stock sells for $43.30 a share, what is the companys cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Cost of equity

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