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6. calculating cost of equity: dgm. the giuntoli co. just issued a dividend of $2.55 per share on its common stock. the company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. if the stock sells for $43 a share, what is the company's cost of equity?

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abiolataiwo2015

If the company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. if the stock sells for $43 a share, the company's cost of equity is 11.23%.

How to find the cost of equity?

Using this formula to find the company cost of equity

Re = {[D1×(1+g)^t] / P0} + g

Where:

Re = Cost of equity

g = Growth rate

t = Time

PO = Stock price

Let plug in the formula

Re = {[2.55×(1+.05)^1] / 43} + .05

Re = {2.6775/43} + .05

Re = .062267 + .05

Re = 0.1123 × 100

Re= 11.23%

Therefore we can conclude that the cost of equity is 11.23%.

Learn more about cost of equity here:https://brainly.com/question/13086476

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