The common stock for the TopSale Corporation sells for 61$. If a new issue is...
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The common stock for the TopSale Corporation sells for 61$. If a new issue is sold, the flotation costs are estimated to be 9 percent. The company pays 70 percent of its earnings in dividends, and a 4.90$ dividend was recently paid. Earnings per share 5 years ago were $5.00. Earnings are expected to continue to grow at the same annual rate in the future as during the past 5 years. The firm's marginal tax rate is 38 percent.
Calculate the cost of (a) internal common equity and (b) external common equity.
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