Cost of equity with and without flotationjavits amp sons, Ask an Expert

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Cost of Equity with and without Flotation

Javits & Sons' common stock currently trades at $27.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (D1 = $3.00), and the constant growth rate is 6% a year.

What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. % I

If the company were to issue new stock, it would incur a 15% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places. %

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91730584

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