The Lo Tech Co. just issued a dividend of $2.20 per share on its common stock. The

Question:

The Lo Tech Co. just issued a dividend of $2.20 per share on its common stock. The company is expected to maintain a constant 6 percent growth rate in its dividends indefinitely.

If the stock sells for $43 a share, what is the company’s cost of equity?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...