COST OF EXTERNAL COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm recently paid a dividend of $2.40 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 3 percent per year. Calculate the firm's cost of external equity (i.e. common stock) using the DCF approach. Flotation cost for a new issue is 4 percent.