Problem-retained earnings versus new common stock

Reference no: EM131795119

Question: Retained earnings versus new common stock Using the data for a firm shown in the following table, calculate the cost of retained earnings and the cost of new common stock using the constant-growth valuation model.

Current market price per share	Dividend growth rate	Projected dividend per share next year	Under pricing per share	Flotation cost per share
$50.00	8%	$3.00	$2.50	$1.75

a. The cost of retained earnings is _____%. (Round to two decimal places.)

b. The cost of new common stock is ____%. (Round to two decimal places.)

Reference no: EM131795119

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