Luther Industries has a dividend yield of 4.6% and and a cost of equity capital of...
Luther Industries has a dividend yield of 4.6% and and a cost of equity capital of 11%. Luther Industries' dividends are expected to grow at a constant rate indefinitely. The growth rate of Luther's dividends are closest to:
A. 15.6%
B. 12.8%
C. 6.4%
D. 5.8%
Please don't use excel and please show step by step.
Homework Answers
Cost of equity capital=Dividend yield+Growth rate
Growth rate=(11-4.6)%
which is equal to
=6.4%
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