Determine before- and after-tax cost of retained earnings

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Question - Jo Ltd's ordinary shares are currently selling for $9.60. The firm pays annual dividends and expects the next one to be $0.97. After flotation costs, the firm expects to net $9.27 per share on a new issue. Dividends are expected to grow at 1.25% for the foreseeable future. Determine the before- and after-tax cost of retained earnings.

Reference no: EM132939620

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