Retained earnings versus new common stock Using the data for each firm shown in the following table, calculate the cost of retained earnings and the cost of new common stock using the constant-growth valuation model. Projected dividend per share next year Underpricing Flotation cost Current market price per share Dividend growth rate Firm per share per share A B 8% 4 $50.00 20.00 42.50 19.00 $2.25 1.00 2.00 2.10 $2.00 0.50 1.00 1.30 $1.00 1.50 2.00 1.70 D 6 2