Expected cash dividends are $3.00, the dividend yield is 4%, flotation costs are 4% of price, and

Question:

Expected cash dividends are $3.00, the dividend yield is 4%, flotation costs are 4% of price, and the growth rate is 3%. Compute cost of new common stock?

but the choices are in %'s

a. 7.00

b. 7.2

c. 6.9

d. 4.2%

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...