The Down and Out Co. just issued a dividend of $2.26 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $35 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

rev: 09_20_2012

12.37%

11.46%

11.78%

11.19%

6.92%