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Alcoa Incorporated has common stock that currently sells for $20 per share. Alcoa expects EPS of $3 per share this year (EPS1 = $3), Alcoa

Alcoa Incorporated has common stock that currently sells for $20 per share. Alcoa expects EPS of $3 per

share this year (EPS1 = $3), Alcoa paid a dividend of $1.40 last year (D0 = $1.40), and Alcoa has a growth

rate on dividends of 7% that is expected to continue. New issues of common stock are subject to flotation

costs of 20%.

Alcoa

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