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Teltech stock paid a dividend yesterday of $2 per share. The dividend is expected to grow at a constant rate of 5% per year. The
Teltech stock paid a dividend yesterday of $2 per share. The dividend is expected to grow at a constant rate of 5% per year. The price of Teltech's common stock today is $35 per share. If Teltech decides to issue new common stock, flotation costs will equal 4% of the market price. Teltech's marginal tax rate is 21%. Based on the above information, the cost of equity is
A. 12.53%.
B. 10.41%.
C. 11.25%.
D. 13.12%.
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