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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 located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Current market price per share | Dividend growth rate | Projected dividend per share next year | Underpricing per share | Flotation cost per share |
|
$41.00 | 8% | $2.46 | $1.50 | $2.00 |
a. The cost of retained earnings is
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