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 $30 a share, what is the company's cost of equity? (Do not round your intermediate calculations.) rev: 09_20_2012

10.26%

17.02% 16.17%

16.37%

17.87%