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Ross Textiles wishes to measure its cost of common stock equity. The firm s stock is currently selling for $48.39. The firm expects to pay
Ross Textiles wishes to measure its cost of common stock equity. The firm s stock is currently selling for $48.39. The firm expects to pay a $3.33 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the following table: (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet.) After underpricing and flotation costs, the firm expects to net $45.00 per share on a new issue. a. Determine the growth rate of dividends from 2011 to 2015. a. The growth rate of dividends from 2011 to 2015 is %(Round to two decimal places.) b. The net proceeds, N_n, the firm will actually receive are $. (Round to two decimal places.) c. Using the constant-growth valuation model, the cost of retained earnings, r_s, is (Round to two decimal places.) d. Using the constant-growth valuation model, the cost of new common stock, r_n, is (Round to two decimal places.)
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