The Drogon Co$.$ just issued a dividend of $$2\mathrm{.}66$ per share on its common stock. The company is expected to maintain a constant $4$ percent growth rate in its dividends indefinitely. If the stock sells for $$40$ a share, what is the company's cost of equity?

rev: $09\_20\_2012$

Multiple Choice

$10\mathrm{.}92\%$

$10\mathrm{.}65\%$

$10\mathrm{.}37\%$

$11\mathrm{.}46\%$

$7\mathrm{.}02\%$