### Dividend is expected to grow at a constant rate

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##### Reference no: EM13919439

Cost of Equity: DCF

Summerdahl Resorts' common stock is currently trading at \$40.00 per share. The stock is expected to pay a dividend of \$1.25 a share at the end of the year (D1 = \$1.25), and the dividend is expected to grow at a constant rate of 5% a year. What is the cost of common equity? Round your answer to two decimal places.

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