Problem
Panhandle Industries, Inc. currently pays an annual common stock dividend of $2.20 per share. The company's dividend has grown steadily over the past 10 years at 8 percent per year; this growth trend is expected to continue for the foreseeable future. The company's present dividend payout ratio, also expected to continue, is 40 percent. In addition, the stock presently sells at eight times current earnings-that is, its "multiple" is 8. Calculate the company's cost of equity capital using the dividend capitalization model approach.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.