A Firm Has Common Stock with a Market Price of $55

Multiple Choice

A firm has common stock with a market price of $55 per share and an expected dividend of $2.81 per share at the end of the coming year. The dividends paid on the outstanding stock over the past five years are as follows: The cost of the firm's common stock equity is ________.

A) 4.1 percent
B) 5.1 percent
C) 12.1 percent
D) 15.4 percent