Problem:
The firm is planning an expansion project that it desires to finance with newly issued common stock. The firm has an outstanding issue of common stock that just paid a dividend of $4.25 per share with 6% constant growth rate, which is trading for $65 per share. You have advised the firm that flotation costs will be 8% per share.
Required:
Question: What will be the cost of the newly issued common shares?
Note: Show supporting computations in good form.