What is the company cost of common equity

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Reference no: EM131545620

Cost of Equity with and without Flotation Jarett & Son's common stock currently trades at $22.00 a share. It is expected to pay an annual dividend of $2.50 a share at the end of the year (D_1 = $2.50), and the constant growth rate is 4% a year.

a. What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round your intermediate calculations. %

b. If the company issued new stock, it would incur a 8% flotation cost. What would be the cost of equity from new stock? Do not round your intermediate calculations. %

Reference no: EM131545620

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