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Accounting

Problem:

Phillip enterprises inc is expected to pay a dividend of $2.60 next year. Dividends are expected to grow at a constant rate of 8% per year,and the stock price is currently $20.00. New stock can be sold at this price subject to flotation costs of 15%. The company 's marginal tax rate is 35%.

Requirement:

Question: Compute the cost of internal equity and the cost of external equity, respectively.

Note: Please show how you came up with the solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173194

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