Problemasian trading company paid a dividend yesterday of 4, Ask an Expert

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Asian Trading Company paid a dividend yesterday of $4 per share. The dividend is expected to grow at a constant rate of 7% per year. The price of Asian Trading Company's stock today is $25 per share. If Asian Trading Company decides to issue new common stock, flotation costs will equal $3 per share. Asian Trading Company's marginal tax rate is 35%.

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Question: Based on the above information, the cost of retained earnings is;

Note: Explain the solution in detail.

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Category:- Basic Finance
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