Suppose Hornsby Ltd. just issued a dividend of $2.48 per share on its common stock. The...

Suppose Hornsby Ltd. just issued a dividend of $2.48 per share on its common stock. The company paid dividends of $1.98, $2.05, $2.22, and $2.32 per share in the last four years.

If the stock currently sells for $67, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

	Cost of equity
Arithmetic dividend growth rate	%
Geometric dividend growth rate

Expert Solution

jeff jeffy answered 2 years ago

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