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The Down and Out Co. just issued a dividend of $1.10 per share on its common...

The Down and Out Co. just issued a dividend of $1.10 per share on its common stock. The company is expected to maintain a constant 0.03 growth rate in its dividends indefinit ely. If the stock sells for $30.00 a share, what is the company's cost of equity? Enter the answer with 4 decimals (e.g. 0.1234)

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Answer #1

cost of equity =(D1/Current price)+Growth rate

=(1.1*1.03)/30+0.03

which is equal to

=0.0678(Approx).

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