A new common stock issue that paid a $1.70 dividend last year. The par value...
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A new common stock issue that paid a $1.70 dividend last year. The par value of the stock is $15, and earnings per share have grown at a rate of 9 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant dividend-earnings ratio of 30 percent. The price of this stock is now $31, but 6 percent flotation costs are anticipated. What is the cost of external common equity?
Internal common equity when the current market price of the common stock is $44. The expected dividend this coming year should be $3.50, increasing thereafter at an annual growth rate of 12 percent. The corporation's tax rate is 21 percent. What is the cost of internal common equity?
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