Question: XYZ Coropration (original name isn't it!) has decided it needs to raise more money to build a new fabrication facility. Part of the money will

XYZ Coropration (original name isn't it!) has decided it needs to raise more money to build a new fabrication facility. Part of the money will come from issuing new common stock. If XYZ is expected to pay a $3.00 dividend on its common stock, the stock has an expected growth rate of 4%, the price of the stock will be $20.00 and they anticipate a flotation cost (the cost to sell the stock) will be $2.00 per share. Their marginal tax rate is 21%. Given this information, what would be the cost of capital for this new common equity?

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