Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $42.43. The firm just recently paid a dividend of $4.04. The firm has been increasing dividends regularly. Five years ago, the dividend was just $.

After underpricing and flotation costs, the firm expects to net 39.04$ per share on a new issue.

a.Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would you expect the company to pay next year?

b. Determine the net proceeds, Nn, that the firm will actually receive.

c.Using the constant-growth valuation model, determine the required return on the company's stock, , which should equal the cost of retained earnings, .

d.Using the constant-growth valuation model, determine the cost of new common stock, rn

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Part 1

a.The average annual dividend growth rate over the past 5 years is

enter your response here%. (Round to two decimal places.)