What is the cost of new common equity

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Problem 1: Barton Industries expects next year's annual dividend, D1, to be $1.80 and it expects dividends to grow at a constant rate gL = 5%. The firm's current common stock price, P0, is $23.60. If it needs to issue new common stock, the firm will encounter a 4.7% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the cost of new common equity?

Reference no: EM132998163

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