Cost of equity with and without flotation

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COST OF EQUITY WITH AND WITHOUT FLOTATION Javits & Sons’s common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year , and the constant growth rate is 5% a year.

What is the company’s cost of common equity if all of its equity comes from retained earnings?

If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock?

Reference no: EM13933512

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