Cost of new stock exceed the cost of retained earnings

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BJK Inc.’s common stock currently sells for $150.00 per share, the company expects to earn $27.50 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 7.7% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings?

Reference no: EM132049240

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