common stock currently sells for $$55\mathrm{.}00$ per share, the company expects to earn $$3\mathrm{.}25$per share during the current year, its expected payout ratio is $60\%,$ and its expected constant growth rate is $5\mathrm{.}00\%.$ New stock can be sold to the public at the current price, but a flotation cost of $9\%$ would be incurred. By how much would the cost of new stock exceed the cost of common from retained earnings?

Answer rating: 100% (QA)

To determine the cost of new stock and compare it to the cost of common stock from retained earnings ... View the full answer