The Evanec Companys next expected dividend, D1, is $3.18; its growth rate is 6%; and its common

Question:

The Evanec Company’s next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share.

a. What is Evanec’s cost of retained earnings, rs?

b. What is Evanec’s percentage flotation cost, F?

c. What is Evanec’s cost of new common stock, re?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...