It is expected to pay a dividend of 2 per share next year


A stock currently trades for a price of $45 per share. It is expected to pay a dividend of $2 per share next year and is expected to provide steady growth of dividends of 4 percent per year for the indefinite future. What is the company's cost of equity?

4.4 percent

10.9 percent

6.5 percent

8.4 percent

18.5 percent

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Basic Statistics: It is expected to pay a dividend of 2 per share next year
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