COST OF EQUITY WITH AND WITHOUT FLOTATION
Jarett & Sons's common stock currently trades at $33.00 a share. It is expected to pay an annual dividend of $2.25 a share at the end of the year (D1 = $2.25), and the constant growth rate is 8% a year.
What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. Do not round your intermediate calculations.
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If the company issued new stock, it would incur a 15% flotation cost. What would be the cost of equity from new stock? Round your answer to two decimal places. Do not round your intermediate calculations.
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