Ross Textiles wishes to measure its cost of common stock equity. Thefirm's stock is currently selling for $62.01

The firm just recently paid a dividend of $4.14

The firm has been increasing dividends regularly. Five yearsago, the dividend was just $2.96

After underpricing and flotationcosts, the firm expects to net $53.95

53.95 per share on a new issue.

a.Determine average annual dividend growth rate over the past 5 years. Using that growthrate, what dividend would you expect the company to pay nextyear?

b. Determine the netproceeds, Nn, that the firm will actually receive.

c.Using theconstant-growth valuationmodel, determine the required return on thecompany's stock, r Subscript s

rs, which should equal the cost of retainedearnings, r Subscript r

Using theconstant-growth valuationmodel, determine the cost of new commonstock, r Subscript n