New buyers of Simmonds Inc. stock expect a return of about 22%. The firm pays flotation costs

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New buyers of Simmonds Inc. stock expect a return of about 22%. The firm pays flotation costs of 9% when it issues new securities. What is Simmonds’ cost of equity?
a. From retained earnings?
b. From new stock?

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Practical financial management

ISBN: 978-0324422634

5th Edition

Authors: William r. Lasher

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Question Posted: Sep 13, 2012 03:51 AM

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New buyers of Simmonds Inc. stock expect a return of about 22%. The firm pays flotation costs

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a New equity from retained earnings is not subject to flotation costs nor is ...View the full answer

Practical financial management

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