Suppose Wacken, Limited, just issued a dividend of $2.59 per share on its common stock. The company paid dividends of $2.25, $2.34, $2.41, and $2.52 per share in the last four years. I If the stock currently sells for $70, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) . What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.; 32.16.) Cost of equity Cost of equity

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Suppose Wacken, Limited, just issued a dividend of $2.59 per share on its common
stock. The company paid dividends of $2.25, $2.34, $2.41, and $2.52 per share in the
last four years.
I If the stock currently sells for $70, what is your best estimate of the company's cost of
equity capital using the arithmetic average growth rate in dividends? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
- What if you use the geometric average growth rate? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g.;
32.16.)
- Cost of equity
Cost of equity
:%
Transcribed Image Text:Suppose Wacken, Limited, just issued a dividend of $2.59 per share on its common stock. The company paid dividends of $2.25, $2.34, $2.41, and $2.52 per share in the last four years. I If the stock currently sells for $70, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) - What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.; 32.16.) - Cost of equity Cost of equity :%
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