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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: $67.00

Dividend growth rate: 9%

Projected dividend per share next year: $4.69

Underpricing per share: $2.50

Flotation cost per share: $1.50

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