Using arithmetic and geometric growth rates

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Suppose Powers Ltd. just issued a dividend of $2.62 per share on its common stock. The company paid dividends of $2.12, $2.19, $2.36, and $2.46 per share in the last four years. If the stock currently sells for $81, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?

Reference no: EM13939540

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