Calculate canyons cost of retained earnings

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Reference no: EM131528522

Canyon Eatery’s common stock, which is currently selling for $65 per share, has a beta coefficient equal to 0.90. Canyon has paid a dividend equal to $5 per share since it has been business, and expectations are that the same dividend will be paid forever. Canyon’s investment banker charges 7 percent when new common stock is issued. Calculate:

a. Canyon’s cost of retained earnings

b. Canyon’s cost of new common equity

Reference no: EM131528522

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