What would be cost of new equity

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COST OF COMMON EQUITY WITH FLOTATION

Banyan Co.’s common stock currently sells for $40.25 per share. The growth rate is a constant 7.2%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations. %

Reference no: EM132036559

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