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I need to know how to answer the problem below. Johnson Production Company paid a dividend yesterday of $3.50 per share. The dividend is expected
I need to know how to answer the problem below.
Johnson Production Company paid a dividend yesterday of $3.50 per share. The dividend is expected to grow at a constant rate of 10% per year. The price of KayCee's common stock today is $40 per share. If KayCee decides to issue new common stock, flotation costs will equal $4.00 per share. KayCee's marginal tax rate is 35%. Based on the above information, the cost of retained earnings is
A. 26.41%
B. 20.69%
C. 19.63%
D. 17.55%
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