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Business, 08.10.2020 14:01 hperky101

COST OF EQUITY WITH AND WITHOUT FLOTATION Jarett & Sons’s common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $1.00 a share at the end of the year (D1=$1.00) , and the constant growth rate is 4% a year. What is the company’s cost of common equity if all of its equity comes from retained earnings? ANSWER ↓ If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock?

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COST OF EQUITY WITH AND WITHOUT FLOTATION Jarett & Sons’s common stock currently trades at $30.0...
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