Problem:
Gravely's stock price is currently $34.25 and the current quarterly dividend is $0.25. Consensus estimates for Gravely indicate a growth rate in earnings of 10% into the foreseeable future.
Required:
Question: If Gravely plans to sell 1 million shares to raise new capital for expansion, what is the cost of new equity if the issuance (flotation) costs are 8%?
Note: Please show guided help with steps and answer.