# Suppose Hornsby Ltd. just issued a dividend of $2.55 per share on its common stock. The company paid dividends of$2.05, $2.12,$2.29, and $2.39 per share in the last four years. If the stock currently sells for$74, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?

Question

Suppose Hornsby Ltd. just issued a dividend of $2.55 per share on its common stock. The company paid dividends of$2.05, $2.12,$2.29, and $2.39 per share in the last four years. If the stock currently sells for$74, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?