Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The
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Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $ The firm just recently paid a dividend of $ The firm has been increasing dividends regularly. Five years ago, the dividend was just $
After underpricing and flotation costs, the firm expects to net $ per share on a new issue.
aDetermine average annual dividend growth rate over the past years. Using that growth rate, what dividend would you expect the company to pay next year?
b Determine the net proceeds, N Subscript n that the firm will actually receive.
cUsing the constantgrowth valuation model, determine the required return on the company's stock, r Subscript srs which should equal the cost of retained earnings, r Subscript rrr
dUsing the constantgrowth valuation model, determine the cost of new common stock, r Subscript nrn
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