What if you use the geometric average growth rate

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Problem

Suppose Whitney Ltd. just issued a dividend of $2.08 per share on its common stock. The company paid dividends of $1.71, $1.82, $1.93, and $1.99 per share in the last four years. Get the instant assignment help.

If the stock currently sells for $45, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends?

What if you use the geometric average growth rate?

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