Arithmetic dividend growth-geometric dividend growth rate

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Reference no: EM132066379

Suppose Hornsby Ltd. 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 cost of equity capital using arithmetic and geometric growth rates? (Do not round intermediate calculations)

Cost of equity

Arithmetic dividend growth rate

Geometric dividend growth rate

Reference no: EM132066379

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