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Problem: Cost of Common Equity with Flotation Banyan Co.'s common stock currently sells for $47.50 per share. The growth rate is a constant 10.4%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 35%, and the expected return on equity (ROE) is 16%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations

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Category:- Basic Finance
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