A company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future. What is the company’s equity cost of retained earnings? If the company sells new common stock to finance new projects and most pay $2 per share in flotation costs, what is the cost of equity? Be sure to include your work for all calculations.

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A: rate of return of common share formula: re=D1P0+g where, D1= dividend next year P0=price of share…

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A: WACC = (Weight of debt * cost of debt) + (Weight of equity * Cost of equity)

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Q: Flo Company has just paid a cash dividend of $2.50 per share. If dividends are expected to grow at a…

A: Solution: With Dividend Growth Model: Dividend are expected to grow at a constant rate per period,…

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A: The mathematical equation for computing the value is: Values in $million

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A: Working note:

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A:

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