Gray\'s Tools just issued a dividend of $1.60 per share on its common stock. The

Question

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. If the stock sells for $31 a share, what is the company's cost of equity? Question 7 options: 8.81 percent 9.37 percent 9.94 percent 10.32 percent 11.46 percent 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. If the stock sells for $31 a share, what is the company's cost of equity? 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. 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 8.81 percent 9.37 percent 9.94 percent 10.32 percent 11.46 percent 8.81 percent 9.37 percent 9.94 percent 10.32 percent 11.46 percent

Explanation / Answer

cost of equity

= ($1.60 1.04)/$31 + 0.04

= 9.37 percent

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