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A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is
A firm's common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74. Its dividend payments are expected to grow at 4%. It is expected that to sell, a new common stock issue must be underpriced $1 per share in floatation costs. Additionally, the firm's marginal tax rate is 40 percent. The firm's cost of a new issue of common stock is ________. (See Table 9.1)
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