Question: Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $52.88. The firm expects to pay a $3.34 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the following table.
Year Dividend 2015 $3.04 2014 2.68 2013 2.51 2012 2.12 2011 2.09
After underpricing and flotation costs, the firm expects to net $52 per share on a new issue. Using the constant-growth valuation model, determine the cost of new common stock, rn.
A) The growth rate of dividends from 2011 to 2015 is ____%
B) The net proceeds, N the frim will actually receive are $____
C) Using the constnt growth valuation model, the cost of retained earnings RS is ____%
D) Using the constant growth valuation model, the cost of new common stock RN is ____%