P910 Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firms stock is currently selling for $70.67. The firm just recently paid a dividend of $4. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.99.

a)After underpricing and flotation costs, the firm expects to net $69 per share on a new issue.

b)Determine average annual dividend growth rate over the past 5 years. Report your answer to the nearest whole percentage. Using that growth rate, what dividend would you expect the company to pay next year?

c)Determine the net proceeds, Nn, that the firm will actually receive.

d)Using the constant-growth valuation model, determine the required return on the companys stock, rs, which should equal the cost of retained earnings, rr.

9-10 Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The m's stock is currently selling for $70.67. The firm just recently paid a dividend of $4. The firm has been creasing dividends regularly. Five years ago, the dividend was just $2.99. fter underpricing and flotation costs, the firm expects to net $69 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Report your answer to the nearest whole percentage. Using that growth rate, what dividend would you expect the company to pay next year? b. Determine the net proceeds, Nn, that the firm will actually receive. c. Using the constant-growth valuation model, determine the required return on the company's stock, rn, which should equal the cost of retained earnings, r. d. Using the constant-growth valuation model, determine the cost of new common stock, r