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A firm has common stock with a market price of $100 per share and the latest dividend paid of $5.24 per share. A new issue
A firm has common stock with a market price of $100 per share and the latest dividend paid of $5.24 per share. A new issue of stock is expected to be sold for $98 per share. Flotation costs are expected to total $1 per share. The dividends paid on the outstanding stock over the past five years are as follows: Year 1 2. 3 4 5 Dividend $4.00 4.28 4.58 4.90 5.24 The cost of this new issue of common stock is 12.22 percent 12.33 percent 12.76 percent 12.39 percent
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