Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital...
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Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 9.9%. Also, bonds can be issued at a pretax cost of 7.9%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $67. Flotation costs will be $4 per share. The recent common stock dividend was $5.81. Dividends are expected to grow at 5% in the future. What is the cost of external equity? PLEASE INPUT THE ANSWER IN PERCENT ROUNDING IT TO 2 DECIMALS. DO NOT INCLUDE % SIGN.E.G., INSTEAD OF 9.99% INPUT 9.99
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