Suppose Wacken, Limited, just issued a dividend of $1.52 per share on its common stock. The company paid dividends of $1.20, $1.26, $1.33, and $1.44 per share in the last four years. . If the stock currently sells for $55, 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.) 1. 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 % 1 Cost of equity %

Suppose Wacken, Limited, just issued a dividend of $1.52 per share on its common stock. The company paid dividends of $1.20, $1.26, $1.33, and $1.44 per share in the last four years. . If the stock currently sells for $55, 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.) 1. 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 % 1 Cost of equity %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

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