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Suppose that a firm has common stock that currently trades for $54.65 in the marketplace, paid an annual dividend last year of $3.25, and has flotation costs of 13.13%. Also, the firm in question had this year $105 million in EBIT, $25 million in interest expenses, $25 million in tax liability, $25 in dividends that is paid to common shareholders, and a return on equity of 12%. What is the firm's after-flotation cost of retained earnings?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92065514

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