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8. Corporation X common stock is currently selling at $30 per share. To determine its cost of new common stock, Corporation has estimated that on
8. Corporation X common stock is currently selling at $30 per share. To determine its cost of new common stock, Corporation has estimated that on average, new shares can be sold for $28. The \$2-per-share underpricing is due to the competitive nature of the market. A second cost associated with a new issue is flotation costs of $3.50 per share that would be paid to issue and sell the new shares. Corporation X pays 5 dollars dividend, and its rate of increase is constant at 5%. What is the cost of equity? (10 Points)
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