Javits amp sons common stock currently trades at 30.00 a, Ask an Expert

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Javits & Sons' common stock currently trades at $ 30.00 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 5% a year.
a. What is the company's cost of common equity if all of its equity comes from retained earnings?
b. 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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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M976268

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