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Your company is attempting to raise $15,000,000 by issuing stock certificates. a. One option is to issue new common stock at a market price of
Your company is attempting to raise $15,000,000 by issuing stock certificates. a. One option is to issue new common stock at a market price of $37.00 with an expected dividend for next year of $3.00. Flotation costs are 7.00 percent of the market price, and the dividend is expected to grow 5.00 percent per year in the foreseeable future. i. What is the dollar value of the flotation costs for these common shares? (2 pts.) ii. Use the dividend growth model to determine the cost of capital for this stock issue. (2 pts.) iii. How many common stock certificates must be sold to raise the needed funds? (2 pts.)
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