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Problem:

The firm is planning an expansion project that it desires to finance with newly issued common stock. The firm has an outstanding issue of common stock that just paid a dividend of $4.25 per share with 6% constant growth rate, which is trading for $65 per share. You have advised the firm that flotation costs will be 8% per share.

Required:

Question: What will be the cost of the newly issued common shares?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169056

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