Estimating the cost of new equity


Central Missouri Cooperative's last dividend was $1.50 per share, with a growth rate of six percent per year expected. The stock is currently selling for $27 per share. If the beta for CMC is .85, the Treasury bill rate at 5.25%, and their market risk premium of 8%, what is their cost of equity. If flotation costs for a new issue are $2 per share, what is the cost of new equity?

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Finance Basics: Estimating the cost of new equity
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