10.4

COST OF EQUITY WITH AND WITHOUT FLOTATION Jarett & Sons's common stock currently trades at $22.00 a share. It is expected to pay an annual dividend of $2.00 a share at the end of the year (D1 $2.00), and the constant growth rate is 4% a year. a. What is the cmpany's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. Do not round your intermediate calculations y issued new stock, it would incur a 19% flotation cost. What would be the cost of equity from new stock, Round your answer to b. If the compan decimal places. Do not round your intermediate calculations