Problem: Suppose that Brown-Murphies' common shares sell for $21.50 per share, that the firm is expected to set their next annual dividend at $0.65 per share, and that all future dividends are expected to grow by 4 percent per year, indefinitely. Assume Brown-Murphies faces a flotation cost of 15 percent on new equity issues. Round final answer 2 decimal places.
Required:
Question: What will be the flotation-adjusted cost of equity? Explain your answers and provides examples.