Determining the cost of retained earnings


A firm's stock is selling for $78. The next annual dividend is expected to be $2.70. The growth rate is 9%. The flotation cost is $5.00. What is the cost of retained earnings?

A) 13.09%

B) 12.46%

C) 12.75%

D) none of the above.

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Finance Basics: Determining the cost of retained earnings
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