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P0 = Price of stock = $45.00 Floatation Expense = 7.0%
ROE = 16.00% Dividend Payout Ratio = 40% Dividend just paid = $2.00
What is cost of equity (rS)?
Answer Format: Enter 7.75% as 7.75
"rS" = [D1 Net Proceeds] + gL
Where: D1 = D0 x (1 + gL)
Net Proceed = P0 x (1 f)
gL = ROE x (1 - Payout Ratio)
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