Cost of common stock equity$$ Ross Textiles wishes to measure its cost of common stock equity. The$$ firm's stock is currently selling for $$$$45\mathrm{.}06.$ The firm just recently paid a dividend of $$$$3\mathrm{.}99.$ The firm has been increasing dividends regularly. Five years$$ ago, the dividend was just $$$$3\mathrm{.}04.$

After underpricing and flotation$$ costs, the firm expects to net $$$$41\mathrm{.}00$ 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, N Subscript n$,$ that the firm will actually receive.

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

d$.$Using the$$ constant$-$growth valuation$$ model, determine the cost of new common$$ stock, r Subscript n$.$

Question content area bottom

Part $1$

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

$$

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

Part $2$

Using that growth$$ rate, the dividend you expect the company to pay next year is $$$

$$

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

Part $3$

b$.$The net$$ proceeds, N Subscript n$,$ the firm will actually receive are $$$

$$

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

Part $4$

c$.$Using the$$ constant$-$growth valuation$$ model, the cost of retained$$ earnings, r Subscript s$,$ is

$$

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

Part $5$

d$.$Using the$$ constant$-$growth valuation$$ model, the cost of new common$$ stock, r Subscript n$,$ is

$$

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