Tomoka Corporation has a marginal tax rate of 34%. The firm recently paid a cash dividend of $4.25 to its common stockholders. Earnings and dividends are expected to grow at 12% per year for the foreseeable future. If the firm issues new common stock, the shares should sell for $85 each. Flotation costs will amount to 5% of market price. 

What would be the firm's cost of external equity?

Answer rating: 100% (QA)

The cost of external equity can be calculated using the following for... View the full answer