Suppose Potter Ltd. just issued a dividend of $2.51 per share on its common stock. The...

Suppose Potter Ltd. just issued a dividend of $2.51 per share on its common stock. The company paid dividends of $2.01, $2.08, $2.25, and $2.35 per share in the last four years.

What was the dividend growth rate for each year? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

What were the arithmetic average and geometric average dividend growth rates over the past four years? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

If the stock currently sells for $70, 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.)

Expert Solution

jeff jeffy answered 1 year ago

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