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Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $40.85. The firm expects to pay a
Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $40.85. The firm expects to pay a $3.36 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the following table:
A. 10.04%
B. $36.36
Please help with C & D.
Year Dividend per Share 2 2015 2014 2013 2012 2011 $3.05 $2.67 $2.57 $2.23 $2.08 After underpricing and flotation costs, the firm expects to net $36.36 per share on a new issue. a. Determine the growth rate of dividends from 2011 to 2015. b. Determine the net proceeds, Nn, that the firm will actually receive c. Using the constant-growth valuation model, determine the cost of retained earnings, rs d. Using the constant-growth valuation model, determine the cost of new common stock, rStep by Step Solution
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