Builtrite's common stock is currently selling for $115 a share and the firm just paid an annual dividend of $3.40 per Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to share. finance an expansion, Builtrite expects flotation costs to be 5% of the expected selling price of $115 a share.

Based on this, and a marginal tax rate of 34%, what is the cost of new common stock?

O 11.36%

O 7.71%

O 11.85%

O 7.50%

Builtrite's common stock is curtently selling for $115 a share and the firm just paid an annual dividend of $3.40 per share. Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to finance an expansion, Builtrite expects flotation costs to be 5% of the expected selling price of $115 a share. Based on this. and a marginal tax rate of 34%, what is the cost of new common stock? 11364 7713 11.85s 7.50