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The common stock for the Bestfold Corporation sells for $59.00. If a new issue is sold, the flotation costs are estimated to be 12 percent.
The common stock for the Bestfold Corporation sells for $59.00. If a new issue is sold, the flotation costs are estimated to be 12 percent. The company pays 70 Percent of its earnings in dividends, and a $3.50 dividend was recently paid. Earnings per share 5 years ago were $3.00 Earnings are expected to continue to grow at the same annual rate in the future as during the past 5 years. The Firms marginal tax rate is 33 percent. Calculate the cost A) internal common equity and B) external common equity.
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