Determining the cost of retained earning


Assignment:

1. Paid a dividend yesterday of $1.50 per share. The dividend is expected to grow at a constant rate of 7 % per year. The price of common stock today is $19 per share. If the company decides to issue new common stock, flotation costs will equal $1.00 per share. The company's marginal tax rate is 35%. The cost of retained earning is?

2. The cost of new common stock is?

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Corporate Finance: Determining the cost of retained earning
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