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The Down and Out Co. just issued an annual dividend of $2.71 per share on its common stock. The company is expected to maintain a
The Down and Out Co. just issued an annual dividend of $2.71 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its annual dividend indefinitely. If the stock sells for $30 a share, what is the company's cost of equity? (Do not round your intermediate calculations.) Hint The stock price is simply the present value of the expected future cash flows. Here the cash flows (dividends) happen to be a growing perpetuity. Multiple Choice 9.78% 15.03% 14.8% 16.35% 15.58%
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