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Stable Corp. has been paying an annual dividend of $3.00 per share for 10 years and is expected to continue such payment in the future.

Stable Corp. has been paying an annual dividend of $3.00 per share for 10 years and is expected to continue such payment in the future. a) If the firms shares are selling for $20.00 per share, what is the cost of the common stock? b) If instead of the no-growth situation, the firm were growing at an annual rate of 5% and increasing its dividends at the same rate, what would be the price of the firms stock (assume stockholders desire a 15% rate of return)

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