The Last Paid Dividend Is $2 for a Share of Common

question 26

Multiple Choice

The last paid dividend is $2 for a share of common stock that is currently selling for $20. What is the cost of common equity if the long-term growth rate in dividends for the firm is expected to be 8%?

• A) 10.8%
• B) 12.8%
• C) 14.8%
• D) 16.8%
• E) 18.8%