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What is the cost of retained earnings for the retainer inc

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Reference no: EM132878918

Question - Suppose you are hired as a consultant by The Retainer Inc. to help them estimate the company's cost of capital. You have been provided with the following information: The company just paid a dividend of $0.89 per share (D0=$0.89); the dividend is expected to grow at a constant rate of 4% per year indefinitely (g=4%); its stock is currently selling at $50 a share (P0 = $50); and issuing new shares will incur a flotation cost of 6% a share. Based on the discounted cash flow approach, what is the cost of retained earnings for The Retainer Inc.?

Reference no: EM132878918

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