The Drogon Co. just issued a dividend of $2.91 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 $40 a share, what is the company's cost of equity?

rev: 09_20_2012

Multiple Choice

• 14.05%

• 7.96%

• 15.52%

• 14.27%

• 14.78%