Problem:
Suppose Powers Ltd. just issued a dividend of $2.47 per share on its common stock. The company paid dividends of $1.97, $2.04, $2.21, and $2.31 per share in the last four years.
Requirement:
Question: If the stock currently sells for $66, what is your best estimate of the company's cost of equity capital using arithmetic and geometric growth rates?
Geometric dividend growth rate %