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40% from common equity . Their common dividend payout ratio is 60%, they paid a dividend of $1.61 per share yesterday, the dividend is expected
40% from common equity. Their common dividend payout ratio is 60%, they paid a dividend of $1.61 per share yesterday, the dividend is expected to grow to $4.27 in 20 years, and is expected to continue this growth rate into the foreseeable future. The common stock has a current market price of $18, and their investment banker suggests a flotation cost of 6% of market value on new common equity. Calculate the after-tax cost of the new bond financing.
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