Calculate the cost of ?internal common equity

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The common stock for the Bestsold Corporation sells for ?$65. If a new issue is? sold, the flotation costs are estimated to be 11 percent. The company pays 60 percent of its earnings in? dividends, and a ?$3.00 dividend was recently paid. Earnings per share 3 years ago were ?$3.00 Earnings are expected to continue to grow at the same annual rate in the future as during the past 3 years. The? firm's marginal tax rate is 33 percent. Calculate the cost of ?(a?) internal common equity and ?(b?) external common equity.

Reference no: EM132420574

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