Builtrite's common stock is currently selling for $101 a share and the firm just paid an...
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Builtrite's common stock is currently selling for $101 a share and the firm just paid an annual dividend of $4.90 per share. Management believes that dividends and earnings should grow at 7% annually. Since new stock would need to be sold to finance an expansion, Builtrite expects flotation costs to be 4% of the expected selling price of $101 a share. Based on this, and a marginal tax rate of 34%, what is the cost of new common stock? O 7.30% 12.11% 12.41% O 7.99% Builtrite's common stock is currently selling for $101 a share and the firm just paid an annual dividend of $4.90 per share. Management believes that dividends and earnings should grow at 7% annually. Since new stock would need to be sold to finance an expansion, Builtrite expects flotation costs to be 4% of the expected selling price of $101 a share. Based on this, and a marginal tax rate of 34%, what is the cost of new common stock? O 7.30% 12.11% 12.41% O 7.99%
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