Hi!

I have a couple questions I need help with...

Jackson Corp.'s common stock currently trades at $47.21 a share. It is expected to pay an annual dividend of $2.25 a share at the end of year (D1= $2.25), and the constant growth rate is 7.5% a year.

a. What is the company's cost of common equity if all of its equity comes from retained earnings?

b. If the company issued new stock, it would incur a 8.5% floatation cost. What would be the cost of equity from new stock?

c. What is the floatation cost adjustment?

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Calculate the stock's expected return, standard deviation, and coefficient of variation

Demand for the Company's Products:

Probability of This Demand Occurring / Rate of Return if This Demand Occurs

Weak:

0.15 / (30%)

Below average:

0.20 / (3%)

Average:

0.35 / 18%

Above average:

0.20 / 25%

Strong:

0.10 / 31%