Mikes inc wish to measure its cost of common stock equity, Ask an Expert

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Mikes Inc wish to measure its cost of common stock equity. The stock is selling for $57.50. The company expects to pay $3.40 dividend at the end of 2013. The dividends for the past 5 years are shown as following

2008 2009 2010 2011 2012

$2.12 $2.30 $2.60 $3.92 $3.10

After underpricing and flotation costs, the company expects to net $52 per share. Using the constant growth valuation model, determine (1) the cost of retained earnings, and (2) the cost of new common stock. Please show all work.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92052179

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