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Retained earnings versus new common stock Using the data for a firm shown in the following table, calculate the cost of retained earnings and the

Retained earnings versus new common stock

Using the data for a firm shown in the following table, calculate the cost of retained earnings and the cost of new common stock using the constant-growth valuation model.

Current market

price per share

Dividend

growth rate

Projected

dividend per

share next year

Underpricing

per share

Flotation cost

per share

$31.00

8%

$1.24

$1.00

$2.00

a. The cost of retained earnings is ?%. (Round to two decimal places.)

b.

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