Cost of equity capital using arithmetic


Problem:

Suppose Powers Ltd. just issued a dividend of $2.47 per share on its common stock. The company paid dividends of $1.97, $2.04, $2.21, and $2.31 per share in the last four years.

Requirement:

Question: If the stock currently sells for $66, what is your best estimate of the company's cost of equity capital using arithmetic and geometric growth rates?

Geometric dividend growth rate %

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Accounting Basics: Cost of equity capital using arithmetic
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