Sheridan Tire Co. just paid an annual dividend of $1.20 on its common shares. If Sheridan is expected to increase its annual dividend by 6.10 percent per year into the foreseeable future and the current price of Sheridan’s common shares is $16.71, what is the cost of common stock for Sheridan? (Round intermediate calculations to 4 decimal places, e.g. 0.1555 and final answer to 2 decimal places, e.g. 15.25%.)
Cost of common stock
cost of common stock =(D1/Current price)+Growth rate
=(1.2*1.061)/16.71+0.061
which is equal to
=13.72%(Approx).
Sheridan Tire Co. just paid an annual dividend of $1.20 on its common shares. If Sheridan...