What would be cost of equity from new stock

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Reference no: EM132062004

Jarett & Sons's common stock currently trades at $26.00 a share. It is expected to pay an annual dividend of $2.75 a share at the end of the year (D1 = $2.75), and the constant growth rate is 6% a year.

a. What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. Do not round your intermediate calculations. % If the company issued new stock, it would incur a 9% flotation cost.

b. What would be the cost of equity from new stock? Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM132062004

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