Cost of common stock equity Ross Textiles wishes to measure its cost of common stock...
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Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $41.81. The firm just recently paid a dividend of $3.98. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.04. After underpricing and flotation costs, the firm expects to net $36.79 per share on a new issue.
c.Using the constant-growth valuation model, determine the required return on the company's stock, rs, which should equal the cost of retained earnings, rr.
d.Using the constant-growth valuation model, determine the cost of new common stock, rn.
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