Generally speaking, the blank the risk, the blank the potential
1 answer:
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Answer: 11.48%; 11.47%
Explanation:
Given that,
Dividend Issued on common stock = $1.20 per share
Dividend paid in last four years:
$.85 per share
$.92 per share
$.99 per share
$1.09 per share
Stock currently sells at = $53
Calculation of growth rates in dividends :
G1 =
= 8.24%
G2 =
= 7.6%
G3 =
= 10.1%
G4 =
= 10.09%
(1) Arithmetic growth Rate =
= 9.01%
Cost of Equity =
= 11.48%
(2) Geometric growth Rate
G = 9%
Cost of Equity =
= 11.47%