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The Down and Out Co. just issued a dividend of $2.81 per share on its common...

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 5 percent growth rate in its dividends indefinitely. If the stock sells for $45 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

11.24%

6.67%

12.13%

11.56%

10.98%

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Answer #1

cost of the equity = 11.56%

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