Determine the firm cost of new equity

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Question: Your Corporation stock sells for $50 per share, its last dividend was $2.00, its growth rate is a constant 5%, and the firm will incur a floating rate cost of 15% if it sells new stock. What is the firm's cost of new equity, ke?

a. 9.20%
b. 9.94%
c. 10.50%
d. 11.75%
e. 12.30%

Reference no: EM1366486

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