QUESTION 25

As the winner of a contest, you are now CFO for the day for Maguire Inc. and your days job involves raising capital for expansion. Maguires common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of common from retained earnings?

		0.09%
		0.19%
		0.37%
		0.56%
		0.84%