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Demonstrate the cost of capital of the stock to firm

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Reference no: EM132642889

Problem 1: The Milton Company plans to issue preferred stock. Currently, the company's stock sells for $120. Once new stock is issued, the Milton Company would receive only $99 (due to flotation costs). The dividend rate is 12%, and the par value of the stock is $100. Compute the cost of capital of the stock to your firm. Show all work.

Reference no: EM132642889

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