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The Jackson Company has just paid a dividend of $3 per share and the current market price of the share is $55. It expects its
The Jackson Company has just paid a dividend of $3 per share and the current market price of the share is $55. It expects its dividend to grow constantly at a growth rate of 10% forever. The firms investment bankers believe that the new issues of common stock would have a flotation cost of 5%.
What would be the cost of new common equity if flotation costs are included?
A)15.25%
B) 16.32%
C) 17%
D) 12.47%
E) 9.85%
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