The Midfield Co. just issued a dividend of $1.36 per share on its common stock. The company is expected to maintain a constant 3 percent growth rate in its dividends indefinitely. If the stock sells for $28 a share, what is the company's cost of equity? 8.08% 7.64% 7.33% O 7.16% O 8.00%

The Midfield Co. just issued a dividend of $1.36 per share on its common stock. The company is expected to maintain a constant 3 percent growth rate in its dividends indefinitely. If the stock sells for $28 a share, what is the company's cost of equity? 8.08% 7.64% 7.33% O 7.16% O 8.00%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

The Midfield Co. just issued a dividend of $1.36 per share on its common stock. The company is
expected to maintain a constant 3 percent growth rate in its dividends indefinitely. If the stock
sells for $28 a share, what is the company's cost of equity?
8.08%
7.64%
7.33%
7.16%
8.00%

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