Problem:
Gray's Tools just issued a dividend of $1.60 per share on its common stock. The company is expected to maintain a constant 4 percent growth rate in its dividends indefinitely.
Required:
Question: If the stock sells for $31 a share, what is the company's cost of equity?
- 8.81 percent
- 9.37 percent
- 9.94 percent
- 10.32 percent
- 11.46 percent
Note: Please answer in proper manner and show all computations