File Edit View History Bookmarks Window Help 0 7 ezto.mheducation.com Chapter 12 Homework i Saved 2 Suppose Potter Lid. just issued a dividend of $2.53 per share on its common stock. The company paid dividends of $2.03, $2.10, $2.27, and $2.37 per share in the last four years. If the stock currently sells for $72, what is your best estimate of the company's 10 cost of equity capital using arithmetic and geometric growth rates? (Do not round points intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) eBook Print Cost of equity using arithmetic growth rate :% References Cost of equity using geometric growth rate 9.37 % Mc 1 . 1 . 1 . 2 . 1 . 3 . 1 . 4 . 1 . 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 10 . 1 . 11 . 1 - 12 . 4 . 13 . 1 . 14 . 1 . 15 . 1 16 1 172 18 of beau ke = 9.39% Shop n Part 2 : 17 . 1. 16 . 1 . 15 . 4 . 14 - 1 . 13 5 Geometric average growth = g = (2.53/2.03)(1/4) - 1 = 5.6589% ke = DO*(1+g)/PO + g ke = 2.53*(1+0.056589)/72 + 0.056589 La - 0 27 04 Rollin APR 27 astv S RA MacBook 80 F3 F5 DII DD F4 F7 F8 % & W # 2 4 5 6 7