What is the company cost of common equity

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Jarett and Sons' common stock currently trades at $39.00 a share. It is expected to pay an annual dividend of $2.50 a share at the end of the year (D1 = $2.50), and the constant growth rate is 4% a year.

1. What is the company's cost of common equity if all of its equity comes from retained earnings?

2. If the company issued new stock, it would incur a 13% flotation cost. What would be the cost of equity from new stock? 

Reference no: EM133305469

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