Question: Magic Candy Co. expects to earn $4.75 per share during the current year, its expected dividend payout ratio is 75%, its expected constant dividend growth

Magic Candy Co. expects to earn $4.75 per share during the

Magic Candy Co. expects to earn $4.75 per share during the current year, its expected dividend payout ratio is 75%, its expected constant dividend growth rate is 5.0%, and its common stock currently sells for $50 per share. New stock can be sold to the public at the current price, but a flotation cost of 4% would be incurred. What would be the cost of equity from new common stock? (Hint: Dividend Payout Ratio Dividend Per Share / Earnings Per Share) O 12.79% 12.13 % O 12.52 % 12.42% O 13.75%

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