Cost of common equity with flotation

Reference no: EM131350852

Cost of Common Equity with Flotation

Banyan Co.’s common stock currently sells for $36.25 per share. The growth rate is a constant 10.8%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 18%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM131350852

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