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What would be the cost of new equity

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Problem - COST OF COMMON EQUITY WITH FLOTATION - Banyan Co.'s common stock currently sells for $46.75 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity?

Reference no: EM132816582

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