Calculate the flotation-adjusted cost of equity

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Reference no: EM132004530

Suppose that Brown-Murphies' common shares sell for $16.50 per share, that the firm is expected to set their next annual dividend at $0.39 per share, and that all future dividends are expected to grow by 3 percent per year, indefinitely. Assume Brown-Murphies faces a flotation cost of 12 percent on new equity issues.

What will be the flotation-adjusted cost of equity?

Reference no: EM132004530

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