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12-1. Calculating Cost of Equity

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12-1. Calculating Cost of Equity. The Altoid Co. just issued a dividend of $1.90 per
share on its common stock. The company is expected to maintain a constant
6 percent growth rate in its dividends indefinitely. If the stock sells for $38 a share,
what is the company's cost of equity?

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Cost of equity = (Dividends per share) / (Current market value of stock) ...

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  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
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