What is the companys cost of common equity

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Reference no: EM13976257

If possible, I would need this question answered (any steps or formulas would help). I think I have the idea/possible answer but I would like to confirm before turning it in.

Javits & Sons’common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year D1 $3.00 , and the constant growth rate is 5% 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: EM13976257

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