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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. (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Projected Current market Dividend dividend per price per share growth rate share next year $34.00 7% $1.36 Underpricing Flotation cost per share per share $2.00 $2.50 C. a. The cost of retained earnings is %. (Round to two decimal places.) WACCMarket value weights The market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table: a. Calculate the firm's weighted average cost of capital. b. Explain how the firm can use this cost in the investment decision-making process. .. a. The firm's weighted average cost of capital, fa, using market value weights is %. (Round to two decimal places.)
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