Suppose company ABC just issued a dividend of $1.88 per share on its common stock....
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Suppose company ABC just issued a dividend of $1.88 per share on its common stock. The company paid dividends of $1.50, $1.59, $1.68, and $1.77 per share in the last four years. If the stock currently sells for $51, what is your best estimate of the companys cost of equity capital using the arithmetic average growth rate in dividends? What if you use the geometric average growth rate?
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