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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

Dividend growth rate 7%

Projected dividend per share next year $3.35

Underpricing per share $1.50

Flotation cost per share $2.25

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