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XYZ Company issues common stock at a price of $25 a share. The firm expects to pay a dividend of $2.20 a share next year.

XYZ Company issues common stock at a price of $25 a share. The firm expects to pay a dividend of $2.20 a share next year. If the dividend is expected to grow at 2.5% annually, what is XYZ's cost of common equity?

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