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Please answer a and b Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects
Please answer a and b
Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $1.40 per share, and the current price of its common stock is $50 per share. The expected growth rate is 4 percent. a. Compute the cost of retained earnings (Ke). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. b. If a $4 flotation cost is involved, compute the cost of new common stock (Kn). Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal placesStep by Step Solution
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