Cost of common stock=(D1/Current price(1-floatation cost)+Growth rate
=(1.25*1.07)/(41.5(1-0.07))+0.07
=(1.3375/38.595)+0.07
which is equal to
=10.47%(Approx).
The common stock, which can be bought at $41.50, has experienced a 7% annual tock when...
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