The Down and Out Co. just issued a dividend of $2.81 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $45 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

rev: 09_20_2012Multiple Choice

• 14.37%

• 13%

• 13.24%

• 13.68%

• 6.84%