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Cost of cormon stock equity Ross Textiles wishes to messure its cost of common stock equify. The firmis slock is cumbenty soling for 570.57 . The fim just recenty pe id a dividend of F4 co. The fim has been increasing dividends regulary. Five years aga, the dividend was just $2.99. Ater underpricing and fiotation costs, the frm expects to net $69.00 per share on a new issue. a. Delermine average annual didend growth rate over the past 5 years. Using that growh rate, what dildend would you expoct the company lo pay nexi year? b. Determine the net proceeds, Now that the firm will actually recelve. c. Using the constant-growh valuaton model, delermine the required retum on the companys stock, r1, which ahould equal the cost of retaned earings, if d. Using the constant grosth valuation model, determine the coot of new common stock if a. The average annuat dividetd growth rate over the past 5 year it I. (Flound to tas decimal places.) Using that grower rate, ere dividend you expect the cormpery to poy next year is 1 (Ahound to two decmal places) b. The net proceeds. N. the firm wit actually recewe are: (Roound to two decimal slaces) c. Ueing the corstant-growth valuaben model, the cost of relaned eanings, IA, 3 . F. (Flound to wo docimal places) Cost of cormon stock equity Ross Textiles wishes to messure its cost of common stock equify. The firmis slock is cumbenty soling for 570.57 . The fim just recenty pe id a dividend of F4 co. The fim has been increasing dividends regulary. Five years aga, the dividend was just $2.99. Ater underpricing and fiotation costs, the frm expects to net $69.00 per share on a new issue. a. Delermine average annual didend growth rate over the past 5 years. Using that growh rate, what dildend would you expoct the company lo pay nexi year? b. Determine the net proceeds, Now that the firm will actually recelve. c. Using the constant-growh valuaton model, delermine the required retum on the companys stock, r1, which ahould equal the cost of retaned earings, if d. Using the constant grosth valuation model, determine the coot of new common stock if a. The average annuat dividetd growth rate over the past 5 year it I. (Flound to tas decimal places.) Using that grower rate, ere dividend you expect the cormpery to poy next year is 1 (Ahound to two decmal places) b. The net proceeds. N. the firm wit actually recewe are: (Roound to two decimal slaces) c. Ueing the corstant-growth valuaben model, the cost of relaned eanings, IA, 3 . F. (Flound to wo docimal places)

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