Cisco Systems, Inc. (CSCO) has a current dividend of $0.84 per share. The current stock price price of Home Depot is $24.45. Cisco has a dividend payout of 43.97% and an expected return on equity of 16.42%. What is the cost of Cisco common equity? (1) Solution Dividend payout ratio = Dividend per share/Earnings available for equity share holders 43.97% = 0.84/Earning available for equity share holders Earnings available for equity share holders = 0.84/43.97% = 1.91 Per share Cost of equity = Dividend per share/market price per share = 0.84/24.45 x 100 = 3.44%.