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What is the company cost of common equity

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Reference no: EM132816556

Problem - COST OF EQUITY WITH AND WITHOUT FLOTATION - Jarett & Sons's common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $1.00 a share at the end of the year (D1 = $1.00), 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?

b. If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock?

Reference no: EM132816556

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