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What would be the cost of equity from new stock

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Question - Jarett & Sons's common stock currently trades at $26.00 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 4% a year.

What is the company's cost of common equity if all of its equity comes from retained earnings?

If the company issued new stock, it would incur a 13% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM133070195

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