Problem:
The Lo Tech Co. just issued a dividend of $2.80 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely.
Required:
If the stock sells for $57.00 a share, what is the company's cost of equity?
- 12.30%
- 11.21%
- 10.91%
- 5.31%
- 5.21%
Note: Show supporting computations in good form.