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Question: A firm has common stock with a market price of $50 per share and an expected dividend of $2.78 per share at the end of the coming year. The dividends are expected to grow at a constant rate of 5% per year. A new issue of stock is expected to be sold for $48 after $1 per share underpricing and $1 per share flotation costs are deducted from the market price. The cost of this new issue of common stock is?

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Category:- Basic Finance
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