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Cost of common from retained earnings

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A companies common stock currently sells for $55.00 per share, the company expects to earn $3.25 per share during the current year, its expected payout ratio is 60%, and its expected constant growth rate is 5.00%. New stock can be sold to the public at the current price, but a flotation cost of 9% would be incurred. By how much would the cost of new stock exceed the cost of common from retained earnings?

Reference no: EM132484196

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