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Cost of common stock equity- Ross Textiles wishes to measure its cost of common stock equity. The? firm's stock is currently selling for $68.92. The firm expects to pay a $3.41 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the following table:
Year Dividend per Share
2015 $3.07
2014 $2.63
2013 $2.59
2012 $2.28
2011 $2.02
A) Determine the growth rate of dividends from 2011 to 2015.
B) Determine the net proceeds, Nn, that the firm will actually receive.
C) Using the constant-growth valuation model, determine the cost of retained earnings, rs.
D) Using the constant-growth valuation model, determine the cost of new common stock, rn.
if you need to negotiate further changes to the budget/plans?
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Your investment should align with your client's investment goals - Provide a rationale for the stock
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