Evanec cost of retained earnings


Problem:

The Evanec Company's next expected dividend, D1, is $3.60; its growth rate is 5%; and its common stock now sells for $31. New stock (external equity) can be sold to net $27.90 per share.

Required:

Question 1: What is Evanec's cost of retained earnings, rs?

Question 2: What is Evanec's percentage flotation cost, F?

Question 3: What is Evanec's cost of new common stock, re?

Note: Please provide through step by step calculations.

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Accounting Basics: Evanec cost of retained earnings
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