In order to meet their capital needs for next year a firm will need to sell some additional shares of their Class A Common Stock. Flotation costs are estimated to be $3.00 per share. Class A shares currently trade at $100.00 and most recently paid a dividend of $7.00 per share. The firm expects to grow at a constant 7.50% for the foreseeable future. Calculate the firm’s cost of common equity from new shares.

Select one:

a. 15.26%

b. 15.03%

c. 14.50%

d. 14.72%

Answer rating: 100% (QA)

Calculation of cost of common equity from new shares Formula Cost of common equity Last ... View the full answer