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A company hired you as a consultant to help them estimate its cost of capital. You have been provided with the following data: D1 =
A company hired you as a consultant to help them estimate its cost of capital. You have been provided with the following data: D1 = $0.80; P0 = $22.50; and g = 5.00% (constant). If this company were to issue new common stock, they would incur 10% floatation costs. What is the cost of equity from retained earnings? What is the cost of issuing new common stock?
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