What would be the cost of equity from new stock

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Reference no: EM13298845

Javits & Son's 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 earning ?

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: EM13298845

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