Compute the cost of retained earnings

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Ellington Electronics wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $3.50 per share, and the current price of its common stock is $72 per share. The expected growth rate is 5 percent.

i) Compute the cost of retained earnings (Ke).

ii)If a $3.0 flotation cost is involved, compute the cost of new common stock (Kn).

Reference no: EM132410916

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