fin 305 ch 11 q 15

Suppose that Brown-Murphies common shares sell for $24.50 per share, that the firm is expected to set their next annual dividend at $0.77 per share, and that all future dividends are expected to grow by 5 percent per year, indefinitely. Assume Brown-Murphies faces a flotation cost of 15 percent on new equity issues.

What will be the flotation-adjusted cost of equity? (Round your answer to 2 decimal places.)

Cost of equity

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