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Problem:

The following information pertains to the common equity of Funtastic Furniture Co:

Current selling price - $68.00
Constant growth rate - 8.0%
Most recently paid dividend - $3.50
Flotation costs - 10%
Marginal tax rate - 40%

Required:

Question: What is the company's cost of retained earnings and what is the company's cost of new common stock?

Note: Explain all steps comprehensively.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170851

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