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Analysts of the ICM Corporation have indicated that the company is expected to grow at a 5 percent rate for as long as it is in business. Currently, ICM’s stock is selling for $100 per share. The most recent dividend paid by the company was $5 per share (i.e., D0 = $5). If ICM issues new common stock, it will incur flotation costs equal to 7 percent. ICM’s marginal tax rate is 40 percent. What is its cost of new equity?

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Financial Management, Finance

Category:- Financial Management
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