A firm's common stock is currently selling for $80 per share. The dividend expected to be paid at the end of the coming year is $5.27. The dividend has been growing at 4% per year. It is expected that to sell, a new common stock issue must be underpriced $1.74 per share and the firm must pay $1 per share in flotation costs. What will the cost (required return or rate) of the new issue of stock be?

Answer rating: 100% (QA)

To calculate the cost required return or rate of the new issue of stock we need to consider the divi... View the full answer