Decides to issue new common stock-flotation costs

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Sentry Manufacturing paid a dividend yesterday of$5 per share (DO = $4). The dividend is expected to grow at a constant rate of 8% per year. The price of Sentry Manufacturing's stock today is $29 per share. If Sentry Manufacturing decides to issue new common stock, flotation costs will equal $2.50 per share. Sentry Manufacturing’s marginal tax rate is 35%. Based on the above information, the cost of retained earnings is a. 24.12% b. 31.4% c. 28.38% d. 26.62%

Reference no: EM131051182

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