a.Cost of retained earnings=(D1/Current price)+Growth rate
=(2.91/35)+0.06
=14.31%(Approx)
b.% flotation cost=(Current price-Net price)/Current price
=(35-31.5)/35
=10%
c.Cost of new common stock=(D1/Net price)+Growth rate
=(2.91/31.5)+0.06
=15.24%(Approx)
The Evanec Company's next expected dividend, D1, is $2.91; its growth rate is 6%; and its...
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